China's currency keeps sinking against the dollar.
Since Donald Trump won the U.S. presidential election last week, Beijing has allowed the yuan to tumble. The fall continued Tuesday, with one American dollar buying around 6.86 yuan, the weakest the Chinese currency has been since the global financial crisis in late 2008.
Trump's victory has cast a deep shadow over the relationship between the world's two largest economies. On the campaign trail, he threatened to impose tariffs of as much as 45% on Chinese goods and label Beijing a currency manipulator on his first day in the White House.
Hitting China with the currency manipulator tag could fuel tensions with Beijing and serve as the first step on a path toward introducing real penalties.
The market impact of Trump's win is already creating an immediate headache for Beijing. The U.S. dollar has surged against other currencies on expectations of a rate hike by the U.S. Federal Reserve next month and the potential for higher growth and inflation under Trump.
If the yuan drops too sharply against the greenback it could set off a repeat of the market panic in August 2015 and January 2016. It would also swell the flows of money pouring out of China's slowing economy since last year.
