SHANGHAI: China’s yuan held steady against the dollar on Friday, but is headed for its fourth weekly decline amid a resurgence in the U.S. currency and growing concerns over an escalating trade war if Donald Trump wins next month’s election.

The yuan was trading around 7.1250 per dollar in late morning session, 0.1% weaker than the previous close. For the week, it is set to decline 0.3%.

The dollar index is little changed after overnight weakness, as the greenback takes a breather after jumping more than 3% so far this month.

“The fast-approaching U.S. election suggests that the U.S. dollar should stay robust even if its momentum has been blunted for now,” Alvin Tan, strategist at RBC Capital Markets said in a note to clients.

The recent yuan guidance rate set by the People’s Bank of China indicates “no PBOC pushback from the recent USD resurgence,” Tan said.

The PBOC on Friday set the midpoint rate at 7.1090 per dollar, in line with market expectations.

China’s yuan edges down as ‘Trump trade’ supports dollar

The market expects a win for Republican Donald Trump, particularly if accompanied by a Republican sweep of Congress, to squeeze the yuan and shares in the export sector.

A victory for Democrat Kamala Harris is likely to result in opposite trades.

“In Trump wins, the U.S. is expected to levy fresh tariff on Chinese goods … which potentially will also hurt the U.S. economy,” Haitong Securities said in a report on Friday.

“There will be a growing focus on the elections the closer we get to Nov.5, and some suggest that the volatility could be extended beyond that should the results of the elections be contested,” Maybank said in a note to clients.

“We continue to see two-way risks for currencies with USD still being stretched and yet having the potential to go higher.”