China’s yuan fell to its lowest level in over two months against the dollar on Monday, weakened by the strength of the U.S. economy and increasing speculation that Donald Trump could win a second presidential term. The yuan has already lost about 1.6% against the dollar in October and is likely to end a three-month appreciation streak amid mounting geopolitical tensions and fears of heightened trade tariffs.

By early trading, the onshore yuan reached 7.1316 to the dollar, after touching 7.1355, its weakest since August 23. The offshore yuan mirrored this trend, dipping to 7.15 against the dollar before stabilizing around 7.1415. Trump’s proposal to boost U.S. manufacturing includes tariffs of 60% or higher on Chinese imports, sparking further uncertainty about the yuan’s future value.

Goldman Sachs analysts projected a yuan depreciation to between 7.40 and 7.50, estimating a 4% to 5% decline if tariffs escalate by 20%. The People’s Bank of China (PBOC) faces the challenge of balancing yuan depreciation while controlling capital outflow risks, suggesting potential policy interventions if the currency slides too sharply.

The PBOC set the midpoint rate at 7.1307 per dollar, a two-month low and only marginally stronger than a previous forecast of 7.1311. The central bank’s focus includes measures to ensure liquidity stability and support credit flow as the year-end approaches, with a new lending tool introduced on Monday to address trillions in expiring loans.

Upcoming events, including China’s legislative meeting in early November, could see additional fiscal stimulus initiatives. Analysts anticipate that these actions, alongside easing monetary policies, could help offset economic pressures for the yuan as it faces persistent challenges from both domestic and international developments.