Yuan hits new low as PBOC continues to depreciate currency

People’s Bank of China sets the yuan reference point at 6.8904, continuing the currency’s ongoing tumble

PUBLISHED : Wednesday, 23 November, 2016, 11:15am
UPDATED : Wednesday, 23 November, 2016, 11:15am

The yuan continued its tumble on Wednesday, hitting new lows after the People’s Bank of China fixed the reference point lower.

Onshore yuan in Shanghai traded at 6.8941 to the US dollar by 10.15 am, 0.06 per cent or 0.004 points weaker than the 6.8900 seen at Tuesday’s close. The current traded at below the earlier lows hit this week, the lowest point since June 2008.

Offshore yuan in Hong Kong traded at 6.9169 to the dollar at 11.15am, its lowest point ever and 0.07 per cent, or 0.005 points weaker than Tuesday’s close of 6.9120.

The People’s Bank of China Wednesday it had set the yuan reference point against the US dollar at 6.8904, 0.0018 per cent lower than Tuesday’s rate when the bank raised the reference point the first time in 13 days.

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

After a six per cent slip this year, it has been the biggest annual retreat since 2005’s revaluation, HSBC’s head of China and Hong Kong equity strategy Steven Sun said in a note.

“Recent data shows that it is less effective and unnecessary to use a cheap CNY to boost exports, given China’s slowing economic growth and the government’s shift away from a reliance on exports towards more consumption,” he said.

The US dollar moved near a 13 and a half year peak on Wednesday, buoyed by strong US housing data which reinforced expectations of an interest rake hike next month.

After climbing on Monday, sterling sunk against the US dollar on Tuesday ahead of the Autumn Statement on Wednesday, when Chancellor Philip Hammond is set to outline tax priorities and spending.