Yuan slips as traders watch Fed decision, Dutch election, Bank of Japan meeting

The yuan declined slightly on Wednesday morning ahead of a flurry of potentially market-moving events in several major economies today.

The offshore yuan in Hong Kong fell for a third day, down 0.03 per cent, or 21 points, to trade at 6.9012 as of 10.55 am. Onshore yuan in Shanghai also slipped for a third straight day, slipping 0.03 per cent, or 19 points, to 6.9156.

The People’s Bank of China guided the midpoint rate up by 3 basis points to 6.9115. Traders in the mainland are allowed to trade the currency within a 2 per cent range of the guided price.

Chinese Premier Li Keqiang said on Wednesday that in the event of a trade war with the US, it would be primarily American enterprises that suffer. In his annual news conference at the end of the National People’s Congress, Li said GDP growth of 6.5 per cent is not a low target and achieving it would be no easy task.

The US Federal Reserve is expected to raise its key interest rate later today at the end of a two-day meeting of its policy-setting committee.

“Despite a likely faster pace of US Fed rate hikes this year, the US dollar has lost some of its strength since the end of last year,” said UBS economist Wang Tao in a report. “We now also think that major US-China trade frictions may be delayed and played outside of the dollar-yuan arena.