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Currencies

Yuan falls sharply after PBOC cuts fixing most in seven weeks

Central bank sets daily mid-point rate at 6.6543 against the US dollar, weaker by 0.3 per cent

PUBLISHED : Friday, 12 August, 2016, 11:43am
UPDATED : Friday, 12 August, 2016, 3:21pm

China’s yuan fell sharply on Friday, after the People’s Bank of China weakened the daily reference rate by the most in seven weeks.

The onshore yuan, which trades in Shanghai, declined 0.2 per cent to 6.6462 on Friday morning. The offshore yuan dropped 0.1 per cent to 6.6518 per US dollar in Hong Kong.

On Friday, the People’s Bank of China (PBOC) set the yuan’s daily mid-point rate at 6.6543 against the US dollar, weaker by 0.3 per cent or 288 pips (percentage in points) from the previous fix, the biggest cut since late June.

The CNH (offshore yuan) markets are doing little more than following broader USD dollar movements
Stephen Innes, senior trader at Oanda Asia Pacific

The move followed three straight days of reference rate increases.

The US dollar has strengthened against most major currencies this week on the back of last Friday’s upbeat jobs report.

“The CNH (offshore yuan) markets are doing little more than following broader USD dollar movements,” said Stephen Innes, senior trader at Oanda Asia Pacific.

“With liquidity below average, as is typical in August, markets should remain subdued,” he added.

The yuan has fallen approximately 7 cent against the greenback since last August, when the PBOC abruptly depreciated the currency by 1.9 per cent, sending shockwaves to global markets.