Section:GDN 1N PaGe:27 Edition Date:190827 Edition:01 Zone: Sent at 26/8/2019 20:01 cYanmaGentaYellowb
Tuesday 27 August 2019 The Guardian •
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1.2223-0.0051 -0.0052Latest US-China tit-for-tat tariff s
drive yuan down to 11-year low
Martin Farrer
Graeme WeardenThe yuan has fallen to its lowest level
in 11 years as the US-China trade war
continued to grip markets.
The Chinese currency sank yester-
day to 7.1500 on the dollar, the lowest
rate since February 2008, after Wash-
ington and Beijing confi rmed further
tit-for-tat tariff s on hundreds of bil-
lions of dollars’ worth of imports.
This latest fl are-up also sent shares
down sharply across the Asia-Pacifi c
region, as investors ditched equities
in favour of safe-haven government
bonds. Gold – another measure of
investor angst – hit its highest level in
six years, at $1,554 an ounce.
Markets stabilised after Donald
Trump claimed that China had asked
to resume negotiations. Speaking at a
G7 meeting in Biarritz, France, the USpresident said phone calls had taken
place “at the highest level”.
“China called last night ... said let’s
get back to the table. So we’ll be getting
back to the table,” Trump said.
Beijing played down the claim.
Geng Shuang , a spokesman for its for-
eign ministry, sa id he was unaware of
these phone calls.
The Chinese vice-premier, Liu He,
who is Beijing’s top trade negotiator,
also attempted to calm the crisis. He
told a tech conference in Chongqing
that China was willing to resolve its
trade dispute with the U S through
calm negotiations and resolutely
opposed the escalation of the confl ict.
Trump welcomed those comments,
claiming that China wanted to make a
deal “very badly”.
“China has taken a very hard hit
over the last few months. It has lost
3 million jobs, and that will soon be
much more,” he said.Trump added that he would sign
up to a deal only if it was “fair”, and
“a good deal for the United States”.
The drop in the yuan will help
Chinese exporters to compete abroad,
and soften the blow of US tariff s. The
fall could also further stoke tensions
with Washington, wh ich called China
a “currency manipulator” earlier
this month.
The yuan’s losses came as China’s
CSI 300 stock index fell by 1.4%. The
Hang Seng in Hong Kong closed down
by nearly 2% , the Nikkei in Tokyo by
2%, and Seoul’s Kospi by 1.5%.
Yields on benchmark 10-year US
treasury debt dropped to their lowestGreece to abolish debt-crisis era
curbs on sending money abroad
Helena Smith
AthensCapital controls imposed on deposi-
tors at the height of Greece’s debt crisis
are being lifted after four years. The
move will fi nally remove restrictionson companies and in dividuals sending
money abroad, introduced to prevent
bank runs during the 2015 Grexit crisis.
Signalling a new era for the country
at the epicentre of the turmoil that
engulfed the eurozone for almost a
decade, the Greek prime minister, Kyr-
iakos Mitsotakis, yesterday declaredthe fi nancial restrictions “a thing of
the past ”. Addressing the parliament
barely seven weeks after his centre-
right government assumed power , he
described the dismantlement of the
banking measures as the end of “a
four-year cycle of insecurity ”.
“After 50 whole months they are
being abolished,” he told MPs.
With controls fully lifted, fi rms and
savers will be able to make transfers
abroad from 1 September.
Mitsotakis’s new pro-businessadministration says restoration of
the free movement of capital will help
restore confi dence in Greece.
Fears of a disorderly exit in mid-
2015 prompted panicked depositors
to make mass cash withdrawals.
Mitsotakis had long described
lifting the controls as a priority for
Greece’s return to normality. Although
eased in recent years, the restrictions
were seen as an impediment to the
revival of an economy bailed out three
times since 2010. Tourists in
Athens’s old
town. The Greek
prime minister
yesterday spoke
of a new era for
the country
PHOTOGRAPH: OMAR
MARQUES/GETTYsince mid-2016 as money was fun-
nelled into the safety of government
debt.
China announced retaliatory tariff s
on $ 75bn of US goods on Friday. Trump
countered by saying the US would raise
its existing tariff s on $ 250bn worth
of Chinese imports from 25% to 30%
on 1 October.
“If there was any doubt before, it’s
a trade war now,” said Kit Juckes , head
of foreign exchange strategy at the
French bank Soci ét é G én érale.
Shares rallied on Wall Street follow-
ing Trump’s comments, with the Dow
Jones industrial average up 252 points,
or nearly 1%, to 25,881 points by lunch-
time in New York. It had tumbled by
2.4% on Friday, losing 623 points.
Fears that the US-China trade war
will hurt global growth have prompted
the Swiss bank UBS to cut its rating on
equities to underweight, for the fi rst
time since the 2008 fi nancial crisis.
“We estimate the direct impact
of all the additional tariff s will rep-
resent only a marginal drag on the
US economy. But downside risks are
increasing for both the global econ-
omy and markets,” said Mark Haefele ,
chief investment offi cer at UBS Global
Wealth Management.German fi rms
gloomy about
economy as
recession
forecast
Graeme WeardenGermany’s economy is on the brink of
recession after business confi dence
plunged to its lowest level in seven
years.
The ifo Institute , a Munich-based
research group, said: “ Worry lines
among German business leaders
are getting deeper and deeper .” Its
monthly confidence index fell to
94.3 points in August, down from
95.8 in July , the weakest reading since
November 2012.
In the latest sign that Europe’s
largest economy is struggling, the
survey of nearly 10,000 German
companies found that managers were
gloomier about the current economic
situation, and more pessimistic about
the outlook over the next six months.
The head of ifo, Professor Clem-
ens Fuest , forecast that Germany’s
GDP w ould shrink this quarter, hav-
ing already contracted by 0.1% in the
p revious three months. That would
put the economy into a recession for
the fi rst time since 2013.
“Everything we see at the moment
means there are ever more indications
of recession in Germany, meaning two
quarters of negative growth,” he told
the business news channel CNBC.
Germany’s industrial sector has
been badly hurt by the US-China
trade war, with exports falling in the
last quarter. Manufacturing output has
contracted as factories have been hit
by falling orders.
Th e slowdown has now spread to
Germany’s service sector. Companies
have reported a deterioration in busi-
ness conditions , making them more
sceptical about growth prospects.
Frederik Ducrozet , a senior econ-
omist at Pictet Asset Management ,
tweeted that Germany’s manufac-
turing sector was already in recession
territory, which has led to “spillover ”
eff ects in the rest of the domestic econ-
omy this summer.
Mikael Sarwe, the head of market
strategy at the fi nancial group Nordea,
agreed that the ifo survey was giving a
clear recession warning.
The German government is under
growing pressure to respond to the
downturn by borrowing more to
bolster spending.
Germany’s “debt brake ” law
compels politicians to draw up a
balanced budget, but some econo-
mists argue that Berlin should now
launch a stimulus programme.
On Sunday, Germany’s finance
minister, Olaf Scholz, called for steps
to tackle climate change, which could
also stimulate growth.‘They are
a thing of
the past...
It’s the end
of a four-year
cycle of
insecurity’Kyriakos
Mitsotakis
Prime minister7.15
Yuan to the dollar yesterday after
US confi rmed tariff s on hundreds of
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