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Yuan extends loss as greenback strengthens

Onshore yuan in Shanghai weakens to 6.6482 against the dollar

PUBLISHED : Tuesday, 02 August, 2016, 3:13pm
UPDATED : Tuesday, 02 August, 2016, 3:13pm

The yuan extended its losses on Tuesday after the US dollar continued to strengthen.

Onshore yuan in Shanghai weakened to 6.6482 against the greenback by 12.55 pm, 0.14 per cent or 92 basis points lower than the previous day.

The offshore yuan traded in Hong Kong extended its losses, down by 0.11 per cent or 72 basis point to 6.6532 against the US dollar, after posting a biggest decline in two weeks on Monday, ending a two-week winning streak.

The People’s Bank of China on Tuesday cut the yuan reference point against the US dollar by 174 basis points to 6.6451, the first cut in six days, after the US currency continued to strengthen.

Traders are allowed to trade up to 2 per cent either side of the reference point for the day.

The US Dollar Index, which measures the strength of the greenback against major currencies, rose by as much as 0.05 per cent in morning Asian trading before falling back to be almost flat as of 11am.

The index rose by 0.23 per cent on Monday, ending five-day -day losing streak.

Analyst say the US dollar gained on a back of a weakening Japanese yen, while traders continued to wait for details of any fiscal stimulus package by the Tokyo government.

The yen is expected to drop significantly if the magnitude of the stimulus is higher than market expectation, which will again drive up US dollar, and in turn put downward pressure on the exchange rate of Chinese yuan against the greenback.

The PBOC set the mid-price of the yuan against the euro at 7.4177, weaker by 79 basis points, at 6.4925 against 100 yen, weaker by 209 basis points, and at 8.7624 to the pund, weaker by 2 basis points.

The Hong Kong dollar traded at 7.7596 per US dollar at noon on Tuesday, weaker by 0.01 per cent.