THE yuan inched down against the U.S. dollar Friday as traders awaited China and the United States’ next moves in their bruising tariff dispute, but markets were generally calmer after a sharp slide early in the week.

Spot yuan finished the domestic session down 0.1 percent at 7.0520 per dollar, its weakest such close since March 2008. The yuan lost 1.6 percent against the greenback last week, its worst loss since June 2018.

The yuan dropped past the key 7 per dollar level last Monday for the first time since the global financial crisis, days after the United States threatened to slap 10 percent tariffs on US$300 billion in Chinese goods.

In the offshore market, the yuan crossed the 7 barrier for the first time ever, hitting a record low.

However, signs began to emerge Tuesday that China was looking to stabilize the currency. Midpoint fixings in the last few days had been successively lower but not as weak as traders expected, while source said domestic banks had been active in forward markets.

“In the near term, we think the yuan will trade in a range of 7.00 to 7.10,” economists at ING said.

However, ING cautioned there is a chance the yuan could fall further if the trade war continues to escalate.

The People’s Bank of China set the midpoint, which limits the yuan’s onshore movement, at 7.0136 per dollar Friday, 97 pips weaker than the previous fix and at the lowest since 2008 for a second consecutive session.

The fixing was still stronger than what traders expected, with market participants increasingly starting to see the yuan trading around a new normal of 7.

“By and large, the market has digested this,” said one trader in Shanghai with a foreign bank. “It doesn’t mean the currency won’t bounce back, though in the short term, there are still a lot of risks and uncertainty in the trade talks.”

The United States is delaying a decision about licenses for U.S. firms to restart trade with Huawei Technologies, according to Bloomberg, while U.S. Senator Marco Rubio urged the White House on Thursday not to allow exception to the ban.

“Short-term exchange rate does not have a lot to do with the fundamentals, it’s much affected by the sentiment, it’s very volatile, and not in a linear relationship,” Guan Tao, a former director of the international payments department at China’s State Administration of Foreign Exchange, the currency regulator. (SD-Agencies)