Chinese telecommunications firm Huawei caused a stir in the foreign exchange markets on Thursday and into Friday morning after a news report raised concerns about the US government’s position on the company.
It is understood that the administration of US President Donald Trump is considering whether or not to let companies in the US trade with Huawei, which was in the news earlier this year over privacy concerns about its links to the Chinese government.
According to a news story by the financial markets media service Bloomberg, Trump is putting off the decision until a later date.
This came in the context of the difficult trading relationship between the US and China, which has experienced renewed tariff battles in recent weeks.
The main victor of the latest stage in the saga was the Japanese yen, which is considered to be a “safe haven” currency that traders can flock to when there is difficulty elsewhere in the markets.
In its pair with the yen, the US dollar went down by a fifth of a percentage point over the course of the day. This left it stuck at around 105.84 yen, which constituted the second week in a row that it went down. It may now come close to 105.5 yen, which was a position it last saw earlier in the week.
The same broader geopolitical forces which have been controlling other aspects of the forex markets in recent weeks also came to the fore on Thursday.
Brexit continued to affect the performance of the British pound, which went down against the euro to its worst point in almost two years. It was recorded at 92.1 pence per euro at one stage.
It also continued to remain in a long term state of decline against the US dollar. It was recorded at one stage at $1.2145, which did not represent much of a daily fluctuation but was part of a wider month of terrible performance.
It is understood that Boris Johnson, who took office as the country’s Prime Minister two weeks or so ago, is privately debating whether or not to hold a “people versus parliament” general election after the Brexit deadline of October 31st.
Johnson is believed to be hoping that a successful exit from the EU on that date would be an ideal springboard for a general election, as he could demonstrate that he managed the task of delivering Brexit.
The US dollar may have suffered in some individual currency pairs, but overall it managed to cling on to its previous position. The dollar index, a device used to artificially track its performance compared to six other major currencies from around the world, stayed firm at 97.566.
Despite the fact that the Chinese yuan was in the spotlight again over claims about Huawei, there was little effect on the offshore version of its currency. It was trading at 7.0816 against the US dollar.
China has two versions of its currency: the offshore yuan, which trades on the free market against other world currencies, and the onshore yuan – whose value is set artificially by the Chinese government.