China: Yuan hits 16-month low against the US dollar as concerns mount about economy, benchmark stock index fell in biggest drop in more than two years

China's stock exchanges and central bank rushed to defend a tumbling yuan and falling stock markets on Monday, trying to soothe investors concerned about Donald Trump's return to the White House and Beijing's ability to revive the economy.

With two weeks before Trump begins a second U.S. presidency, his threats of big tariffs on Chinese imports have rattled the yuan, driven mainland bond yields down and got stocks off to a rough start to 2025.

China's stock exchanges asked large mutual funds to restrict their selling of stocks at the beginning of the year, three sources familiar with the matter told Reuters, underscoring the jittery mood in the market.

At least four large mutual funds received calls from the Shanghai and Shenzhen stock exchanges on Dec. 31 and Jan. 2 and 3, asking them to ensure they bought more stocks than they sold each day, the sources said.

The Shanghai and Shenzhen stock exchanges recently met with foreign institutions, both bourses said on Sunday, assuring investors they would continue to open up China's capital markets.

The People's Bank of China could issue more yuan bills in Hong Kong in January, state-owned news outlet Yicai reported on Monday, in a sign authorities want to absorb currency to dampen speculation. Financial News, a central bank publication, said the PBOC has the tools and the experience to react to yuan depreciation.

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