US Market Crash: China’s yuan edges up, recovers losses as strong midpoint rate eases US-China trade tensions after Trump tariff announcement

The Chinese Yuan recovered on Monday (October 13, 2025) to edge higher against the dollar, cutting back sharp losses in the prior session. The impact of the renewed trade tensions between the US and China was eased by a much stronger midpoint guidance rate.

The Chinese currency weakened late Friday (October 10, 2025) after US President Donald Trump warned he would impose a 100% tariff on Chinese goods, along with new export controls on critical software by November 1, in retaliation against Beijing’s expanded curbs on its critical rare earth exports.

US market crash

Trump’s announcement of a “massive increase” in tariffs on Chinese imports triggered a crash in the US stock markets on Friday, as the decision prompted investors to wake up to a sudden drop. This broke the months-long calm in the markets.
On Friday, the Dow Jones Industrial Average dropped 1.05% to 45,873, and the S&P 500 fell 0.8%, while the Nasdaq Composite, heavy in tech stocks, slid nearly 2%, leading the declines.

Trump’s announcement came after China imposed export controls on rare earth minerals vital to the tech and defense industries, coupled with new port fees on American ships and an antitrust probe into Qualcomm.

Investors in Chinese stocks react to US-China trade tensions

Investors in Chinese stocks reacted to the latest escalation in the trade war by dumping their holdings, with traders also taking some money off the table from a market hovering near its highest level in a decade.
The slight early strength in the yuan comes as the central bank guided it higher with a firmer-than-expected official midpoint, traders said, according to Reuters. The traders interpreted it as an attempt by authorities to keep the currency stable.
The People’s Bank of China (PBOC) set the midpoint rate at 7.1007 per dollar, its strongest since November 6, 2024. The spot yuan is allowed to trade 2% either side of the midpoint each day. The official guidance rate was 203 pips firmer than a Reuters’ estimate of 7.1210.

In the spot market, the onshore yuan traded at 7.1295 per dollar as of 0236 GMT, compared with the previous close of 7.1360, as reported by Reuters. Its offshore counterpart traded at 7.135 per dollar, up about 0.15% in Asian trade.