One dollar bought 6.92 yuan on Friday. The Chinese currency has fallen by nearly 2.7% this month and is now uncomfortably close to the symbolic level of 7 against the dollar, which was last broken during the 2008 financial crisis.
However, Beijing is in a difficult position.
The currency devaluation could help China by lifting the impact of new US tariffs and keeping its exports in America affordable. However, a sharp decline in the yuan could trigger a cash outflow from China and affect economic stability.
At the same time, the Chinese government may be reluctant to support its currency, as this could open Beijing up to further criticism from Washington.
"China is trapped between a rock and a hard place," said Miguel Chanco, senior Asia economist at Pantheon Macroeconomics.
China may be tempted to use its currency as a weapon against the United States, said Bank of America analysts Merrill Lynch Athanasios Vamvakidis and Claudio Piron in a note customers on Friday.
Degrading the yuan would be a "gentler" option than targeting US companies or investing in China, they said. Experienced hedge fund manager Mark Yusko believes China can do so without putting too much of a problem on its own economy.
Typically, China should worry about a withdrawal of money from the country given the yuan's weakening as investors lose confidence and swap [1
That does not mean that such a strategy is without risks.
The drop in the yuan to the US dollar below 7 could trigger further sell-offs and push it further down, Chanco said. That would probably be unattractive for Beijing, he added.
Another big question is whether China chooses to sell US Treasuries more quickly, which in turn buys yuan and builds its value.
China reduced US debt to US $ 1.12 trillion in US Treasury bonds in March, its lowest level in nearly two years.
Chanco views dumping of US sovereign debt as nuclear option, while Yusko China considers this to be absolute Speed up the sale of Treasuries if a solution is not reached soon.
"I think it's very likely," he said.
2nd Annual General Meetings: The annual general meeting of Amazon will be held on Wednesday. This year's power of attorney includes 12 shareholder suggestions on all topics, from facial recognition technology to food waste.
A resolution supported by thousands of company employees would require a report on the company's actions to combat and prepare for climate change.
Expect analysts to inform retailers about their plans to handle tariffs and their involvement in China.
4th Meeting in the Desert: Armed drone attacks. A deepening trade war. Devastating sanctions against Iran and Venezuela. There is no shortage of hotspots that OPEC and its allies can discuss on Sunday in Jeddah, Saudi Arabia.
The Summit's compliance committee could provide clues as to whether manufacturers will bow to Trump's pressure to boost output at next month's meeting in Vienna.
5. Next week:
Tuesday – BP Annual Meeting; Kohl's, Home Depot ( Nordstrom, JCPenney, ) Urban Outfitters ( and ) TJX ( Result )
Wednesday – Fed minutes; Amazon annual meeting; Target, Lowe's and ) L Brands [ Result )
Thursday – Indian election results; Annual Meeting of Deutsche Bank; US New Home Sales; Best Buy () Ross Stores [ and HP Earnings )
Friday – Orders from US durable goods; Foot Locker [ Result )
Nathaniel Meyersohn, Matt Egan and Lydia DePillis contributed to this report.