The US dollar rose 0.2% against the yuan in onshore trade to 7.1031 on Thursday (May 21) as investors focused on fresh tensions between the United States and China.
Trade tensions have flared between the world’s two biggest economies in recent weeks with U.S. President Donald Trump blaming Beijing for a lack of transparency over the true extent of the coronavirus outbreak in China, where cases were first reported.
In a series of tweets on Wednesday night, Trump accused the Chinese authorities of leading a massive disinformation and propaganda attack on the United States and Europe.”
He also blasted the Asian nation over the origin of the coronavirus in a tweet, saying that it was the “incompetence of China” that caused “this mass Worldwide killing.”
And it gets worse. Recently, the White House restricted sales from global chipmaker companies to Chinese telecommunications giant Huawei and the Federal Retirement Thrift Investment Board (FRTIB) charged with overseeing billions in federal retirement dollars announced it would indefinitely delay plans to invest in Chinese stocks.
(The Chinese Yuan lost 0.00447 points or 0.06% to 7.10691 against the US Dollar on Thursday after the onshore rate was set at 7.0868)
Yesterday, the US Senate unanimously passed bill that may force Chinese firms to delist from US exchanges. The Holding Foreign Companies Accountable Act aims to increase oversight of Chinese companies by insisting that if the Public Company Accounting Oversight Board is unable to inspect reports of accounting firms used by stock issuers for three years, the firm will have to delist from US exchanges.
“We just want Chinese companies to play by the same rules as everybody else,” Sen. Chris Van Hollen told Yahoo Finance shortly after the bill passed . “This is an important step forward for transparency,” he said.
However, the legislation, which is also backed by the Trump administration, has to be passed by the House of Representatives before being signed into law by President Trump.
Several days ago the US president directed criticism towards China, saying he now feels "differently" about the trade deal which was signed between Washington and Beijing in January adding “and we’ll see what all happens.”
As Washington tries to hold Beijing accountable for the global outbreak of the novel coronavirus, China said on Monday (May 18) it was pushing ahead with listings of domestic companies on the London Stock Exchange (LSE), where only a handful of Chinese companies currently trade.
Beijing will resume vetting applications by Chinese companies looking to sell global depository receipts (GDR) on the LSE through a link with the Shanghai bourse, a source told the South China Morning Post.
Some investors are skeptical about the move. As London lags behind NYSE and Nasdaq, it remains to be seen whether the strategy will be successful, they say.