Yuan drops to lowest level in a week
Offshore yuan in Hong Kong has declined for seven consecutive trading days
The yuan dropped to its lowest level in a week on Tuesday, as the gap between onshore and offshore yuan narrowed.
Offshore yuan in Hong Kong has now declined for seven consecutive trading days, sitting 0.01 per cent weaker at 6.9061 to the US dollar by 3.15 pm.
Onshore yuan in Shanghai dropped for the fifth day, trading at 6.9026 to the US dollar, 0.06 per cent, or 38 points weaker than on Monday.
The People’s Bank of China on Tuesday set the yuan reference point against the US dollar at 6.8975, 85 basis points or 0.12 per cent stronger than on Monday. Traders are allowed to trade up to 2 per cent either side of the reference point for the day.
“Major currencies all weakened with the US dollar strengthening,” said Jasper Lo, chief strategist of King International Futures. The US dollar index rose for four days, but retreated slightly on Tuesday, down 0.04 per cent at 100.98.
“The US dollar cannot sustain its strength if tax reforms in the country do not go smoothly,” said Lo.
The US is now unlikely to call China a currency manipulator, after last week’s meeting between Presidents Xi Jinping and Donald Trump “going as well as it could”, he said.
The two leaders agreed on a “100-day plan” to address their trade imbalance.
The US will release a semi-annual report on its trading partners’ foreign-exchange policy this Friday. “Chinese yuan traded weaker maybe because some investors still have concerns the report will show a negative view on China,” Lo added.
In other currency trading, the British pound was 0.01 per cent weaker to trade at 1.2408, while the euro weakened 0.08 per cent to trade at 1.0581. The Japanese Yen weakened 0.36 per cent at 110.53.