Chinese yuan continues its fall against the US dollar

China’s offshore yuan slumped to a one-month low, dipping for a fifth day in a row as the gap widened between offshore and onshore yuan with as the dollar strengthening.

Offshore yuan in Hong Kong declined to trade at the weakest level in a month of 6.8764 to the US dollar at 10.25 am, 0.19 per cent, or 129 points weaker than on Friday.

Onshore yuan in Shanghai dropped for the second day, down 0.11 per cent to 6.8881, reaching its weakest level since February 8 of 6.8916.

The People’s Bank of China on Monday set the yuan reference point against the US dollar at 6.8898, 79 basis points or 0.11 per cent weaker than on Friday, reaching the weakest level in four weeks.

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

Pan Gongsheng, the head of the State Administration of Foreign Exchange, said the yuan will maintain its stability in spite of some fluctuations as China’s economy improves.

The US dollar continued to trade stronger, boosted by tax pledges by of US President Donald Trump.

Corporate earnings in the US are expected to rise after President Trump promised a major tax announcement in two or three weeks, with investors keen to know details of his promised fiscal stimulus.

All other major currencies weakened against the greenback.

The Japanese yen was down 0.08 per cent at 113.95 per dollar by 10.25 am. On Friday, President Trump pledged closer security and economic cooperation with Japan.

In other currency trading, the pound was down to US$1.2484 on Monday morning while the euro weakened 0.23 per cent to US$1.0614.