PBOC sets yuan fixing at six-year low amid renewed depreciation pressure
Monday’s action marks the first forex trades in China’s onshore market since the yuan was formally included into the IMF’s special drawing right reserve at the start of October
China’s central bank set the yuan reference rate at the lowest level in more than six years on Monday, in response to renewed depreciation pressure for the currency since the onshore market closed on September 30, ahead of the “golden week” holiday that marks the founding of modern China.
The People’s Bank of China set the yuan reference rate at 6.7008 to the US dollar, 230 basis points or 0.34 per cent weaker than its close on September 30, and its lowest level since September 2010.
Onshore yuan in Shanghai closed the day 0.42 per cent lower shedding 283 basis points at 6.7028 to the US dollar at 4.30pm.
The offshore yuan exchange rate in Hong Kong fell by a similar rate during the mainland holiday. The Hong Kong rate was quoted at 6.7086 on Monday, its lowest levels in six years.
The fixing came after the offshore yuan slid to a nine-month low on Friday amid continuous strength of the US dollar and weakness in the British pound, easing past the 6.7 threshold to 6.7178 against the greenback. Sterling was quoted at US$1.2392 on Monday afternoon, down 0.27 per cent weaker from Friday.
Zhou Xiaochuan, the governor of the People’s Bank of China, said at a meeting of G20 central bank governors and finance ministers in Washington last week that China is trying to seek a balance between exchange rate flexibility and exchange rate stability and will continue to push forward market-oriented exchange rate reform.