China’s yuan weakens against the dollar following Yellen comments

PUBLISHED : Tuesday, 07 June, 2016, 12:57pm
UPDATED : Tuesday, 07 June, 2016, 6:52pm

China’s yuan currency continued to weaken on Tuesday after the central bank set the daily reference rate lower.

Onshore yuan in Shanghai traded at 6.5705 to the US dollar at 5.30 pm, 0.13 per cent or 88 basis points weaker than on Monday.

Offshore yuan in Hong Kong traded at 6.5715 to the US dollar at 5.30 pm , 0.07 per cent, or 45 basis points weaker than on Monday.

The People’s Bank of China on Tuesday set the yuan reference rate against the US dollar at 6.5618, lower by 121 basis points or 0.18 per cent from Monday. Dealers are allowed to trade up to 2 per cent either side of the reference rate for the day.

Jasper Lo, chief executive of King International, said comments from Federal Reserve Chairwoman Janet Yellen on Monday helped to relieve concerns of an imminent US interest rate hike.

Yellen also signalled an upbeat outlook for the US economy and said interest rates increases are coming but gave little sense of the timing.

The yuan fell to its lowest level in one and half years on Monday against a trade-weighted basket, after the PBOC strengthened the yuan’s reference rate by less than expected versus the dollar, suggesting that the authority still has a weakening bias, according to Bloomberg.

The US dollar tumbled to a three-week low on Friday, after the May nonfarm payroll report showed the US economy added the fewest number of jobs since September 2010.