Yuan weakens past 7 per dollar and the US labels China a currency manipulator

China's yuan weakened past 7 per US dollar on Monday for the first time in more than a decade, a level many analysts had seen as a line Beijing would defend. Later the same day, the US Treasury designated China a currency manipulator.

The move followed a new round of US tariff threats on Chinese imports. A weaker yuan makes Chinese exports cheaper and can offset some of the impact of tariffs, which is why the currency has become part of the wider trade dispute.

The People's Bank of China said the depreciation reflected market forces and trade uncertainty, and that it had tools to keep the currency stable. On Tuesday, it set the daily reference rate stronger than many had expected, which helped calm markets.

Global markets reacted sharply on Monday:

• US stocks had one of their worst days of the year
• Gold rose and government bond yields fell
• Emerging market currencies weakened alongside the yuan

The manipulator label is largely symbolic in its immediate effects, but it adds another layer to the tension between the world's two largest economies. It also highlights how exchange rates can become policy weapons, a theme that runs through debates on the dollar's global role and the future of cross-border payments.