Yuan trades lower for a second day

Currency traders embrace the likelihood of US interest rate hikes to come later rather than sooner

PUBLISHED : Thursday, 21 April, 2016, 2:06pm
UPDATED : Thursday, 21 April, 2016, 2:06pm

The Chinese yuan slid lower on Thursday, declining for the second straight session, after the Chinese central bank issued a weaker mid point setting.

The offshore yuan in Hong Kong fell 0.02 per cent or 14 basis points to 6.4820 against the US dollar at 10.45 am, its second day of losses. The onshore yuan in Shanghai was at 6.4766 per dollar, down 0.13 per cent or 85 basis points from Wednesday’s closing.

The People’s Bank of China on Thursday set the yuan mid point rate weaker, at 6.4803 against the greenback, down 224 basis points or 0.35 per cent from Wednesday’s fix. This reverses a string of stronger daily settings by the PBOC, including Wednesday’s reference rate setting of 6.4579 per buck, which was the strongest since December 15.

State Administration of Foreign Exchange spokesman Wang Chunying said at a press conference Thursday that an interest rate hike by the US Federal Reserve would increase pressure of China’s cross-border capital outflows in the short term.

Stephen Innes, senior trader at OANDA Asia Pacific, said the market believes in the likelihood of later rather than sooner rate hikes as US housing starts data, announced on Tuesday, was in below expectations despite US yields moving higher.