Chinese yuan weakens even as other currencies strengthen against the US dollar
Chinese currency declines both in onshore and offshore trade.
The Chinese yuan weakened on Thursday morning even as other currencies strengthened against the US dollar, which had strengthened for six straight days.
The yuan traded in Shanghai 0.18 per cent, or 117 basis points, lower in the morning session at 6.5020 against the US dollar at 10.15 am. The onshore yuan closed at a two-month low on Tuesday, at 6.5155 to the US dollar, as the US currency strengthened against its global peers.
The yuan that trades in Hong Kong slid 0.04 per cent, or 26 basis points, to 6.5294 to the US dollar. The offshore yuan fell after gaining in the past two sessions.
The People’s Bank of China, the country’s central bank, set the yuan reference point against the US dollar at 6.4959, 250 basis points stronger than its fixing on Wednesday, the greatest daily fix since April 29.
Traders are allowed to trade up to 2 per cent on either side of the reference point for the day.
“The US dollar finally weakened overnight, causing a basket of other currencies to rise, and the yuan followed suit [initially],” said Jasper Lo Cho-yan, chief executive of King International Financial.
Lo added that it was a short-term rebound and the Chinese currency softened in late morning trade.
“The yuan still remains under pressure as investors remain concerned about China’s economy,” Lo said.
The People’s Daily, the communist party’s mouthpiece, ran a front page article this week saying that “China’s economy is unlikely to achieve a V-shape rebound, but instead an L-shape growth.”
It cited an “authoritative insider”.