Yuan loses ground amid lower PBOC daily fixing, US dollar strength
The yuan weakened on Thursday after the People’s Bank of China lowered its reference rate by the most in one month.
The onshore yuan in Shanghai was quoted at 6.6342 per US dollar by 11am on Thursday, compared to 6.6308 at the close in the previous trading day. The offshore yuan traded in Hong Kong was also slightly lower at 6.6385 on Wednesday morning after closing overnight trading on Tuesday at 6.6427.
The People’s Bank of China on Thursday set the yuan reference point against the US dollar lower by 0.4 per cent or 249 basis points to 6.6444, the biggest cut since July 6. Traders are allowed to trade up to 2 per cent either side of the reference point for the day.
The US dollar index, a gauge of the strength of the greenback, closed 0.47 per cent higher on Wednesday after the latest figures show that US private employers added more jobs than expected in July.
China’s top economic planner the National Reform and Development Commission on Wednesday said in a statement that China needed “to find the appropriate time to further cut interest rates and bank reserve requirement ratios”. These statement were later removed from the statement on the commission’s website.
The PBOC later Wednesday reiterated that it will maintain a “prudent” monetary policy and fine-tune policy in a pre-emptive and timely way.
The PBOC set the mid-price of the yuan against the euro at 7.4004, stronger by 327 basis points, at 6.5593 against 100 yen, weaker by 119 basis points, and at 8.8538 to the pound, weaker by 202 basis points.
The Hong Kong dollar traded at 7.7584 per US dollar as of 11am, stronger by 0.02 per cent.