China’s currency has plunged to its lowest level in more than three years, prompting fears of a sharp depreciation.
China’s official currency, the renminbi, fell to 2.3777 yuan per dollar on Thursday, its lowest since April.
The yuan weakened by almost 1% against the dollar overnight, and analysts say that could lead to an accelerated depreciation of the currency.
“The renminbics are weakening.
It is too weak,” said Michael Lai, a senior economist at Capital Economics.
A weakening currency will also be a major drag on China’s economy, which is already in a downward spiral due to the massive devaluation.
Analysts say the currency has fallen by a third since the start of the year, and Beijing is now looking to stimulate the economy with higher spending, to shore up confidence.
It is also pushing its biggest foreign investor, the United States, to ramp up trade with China to boost its exports.
However, Beijing’s foreign exchange reserves are at the lowest level since September 2015, according to the Bank of China, which makes the currency trade data.
Capital Economics expects the renmals to weaken further in the coming weeks.
Meanwhile, a Chinese state-run news agency said Beijing had suspended the sale of a major liquefied natural gas project to India and South Korea, amid rising pressure from the United Nations over its alleged interference in the Malaysian air disaster.
The Chinese foreign ministry said that a decision to halt the liquefaction project had been taken on March 16, and that it had been “noted to the relevant authorities” by “the relevant government agencies”.
The announcement comes days after the UN General Assembly voted to establish an independent commission to probe China’s alleged meddling in the disaster in 2014, which killed nearly 300 people.
China has denied involvement in the air disaster, which it blames on rogue Malaysian air traffic controllers.