Offshore yuan falls to one-month low ahead of US Fed chair’s speech on interest rates

The offshore Chinese yuan fell to one-month low against the US dollar on Friday morning, ahead of a key speech by the US Federal Reserve chair Janet Yellen later in the day.

The offshore yuan, which trades in Hong Kong, was down 0.15 per cent to 6.6814 per US dollar on Friday morning, the lowest level in a month. So far this week, it has fallen 0.34 per cent, adding to a 0.06 per cent drop last week.

The onshore yuan trading in Shanghai dropped 0.13 per cent to 6.6648 per US dollar. The rate has weakened 0.2 per cent following a 0.29 per cent loss last week.

The weakness came before a closely-watched speech by Fed chairwoman Janet Yellen in Jackson Hole at 11am US eastern time (11pm Hong Kong time). Traders expects her to give a hint on whether the US would increase the interest rate as soon as in September.

“Today’s focus will clearly be on the Fed chair Janet Yellen’s speech at Jackson Hole,” said Stephen Innes, senior trader at OANDA.

He said most traders have ruled out the Hawkish Pain Trade, a term referring to a US interest rate rise in September, while they predict that the rate increase is more likely to come in December.