Yuan eases further after China devalues its currency to weakest in a month
The yuan eased for a third session against the US dollar in Shanghai on Thursday morning, after the People’s Bank of China (PBOC) set the currency’s guidance rate at its weakest level since late March.
The PBOC lowered the yuan’s reference rate for a second straight day to 6.5128 per US dollar, softer by 185 pips from the previous fixing. On Wednesday, the central bank cut the fixing by most in more than eight months.
The onshore rate softened by 0.13 per cent to 6.5029 per US dollar as of 11am, the weakest level since the end of March.
Offshore yuan in Hong Kong rebounded a little after two sessions of devaluation. It was trading at 6.5118 per US dollar, stronger by 0.08 per cent from the previous close. The offshore rate on Wednesday touched its weakest level in more than a month at 6.5163.
Analysts from Bank of America Merrill Lynch said in a recent report that China is proving “more adept at credibly weakening the CNY” to accommodate an expansionary fiscal and monetary policy.
“China’s data flow and market behaviour is reflective of re-leveraging and growth that will allow it to better manage FX expectations alongside a steady trade-weighted depreciation of RMB,” they said.