"Further weakness would send a signal that China wants to start a currency war, which we strongly believe is not the case because this would do little to benefit the Chinese economy as other Asian currencies would just weaken along with the yuan".
Exports last month rose 3.3 percent from a year earlier, the fastest since March and more than the most optimistic estimate in a Reuters poll, customs data showed yesterday.
"Interest rate differential was an important factor leading the yuan depreciation against the dollar previous year as yields between China and the United States shrunk sharply", he said.
Tensions between the world's two largest economies further intensified this week after the United States officially named China a "currency manipulator" following a sharp drop in the value of the yuan against the U.S. dollar.
The move was seen by many as retaliation for tariffs recently announced by US President Donald Trump - and markets sold off worldwide on concerns over a trade-war escalation.
In response, China on Monday said it would stop purchasing U.S. agricultural products.
Decline in China imports last month, highlighting still sluggish domestic demand, although the drop was less than an expected 8.3 per cent and June's 7.3 per cent.
"It could suggest that some exporters are trying to diversify their export regions, it could also be due to manufacturers' relocations to ASEAN [from China]", Australia and New Zealand Banking Group Ltd senior China economist Betty Wang (王蕊) said.
China's trade surplus with the United States stood at US$27.97 billion last month, narrowing from June's US$29.92 billion. But the figure for the first seven months of this year was up by around 4 percent, indicating a continuing imbalance.
On Thursday, the People's Bank of China set its official yuan midpoint below the key 7 level to the U.S. dollar for the first time since 2008, reports the BBC.
Hours later, Washington branded Beijing a "currency manipulator".
On the Chinese side, only US$50 billion worth of USA imports remain without tariffs, fuelling speculation that China will need to resort to other methods of retaliation if Washington continues to ratchet up the pressure.
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