Yuan extends loss as tepid economic data adds to concerns
Weak loans growth in July raises expectations the central bank may need to ease monetary policies further
The yuan extended losses on Monday, as weak bank loans data in July added to China’s economic woes and raised expectations that the government may have to ease monetary policies further to maintain growth.
Onshore yuan in Shanghai weakened 0.11 per cent, or by 76 points, to 6.6400 against the US dollar as of 7.45pm. Offshore yuan strengthened 0.05 per cent, or by 35 pips, to 6.6478 per US dollar.
The People’s Bank of China on Monday set the yuan fixing price at 6.6430, 113 pips or 0.16 per cent stronger from the last trading day on Friday.
China’s new bank loans growth in July was only 463.6 billion yuan, half the amount estimated in a Bloomberg survey. The M2 growth also slowed to 10.2 per cent in July, slower than the 11.8 per cent clip reported in June.
The data came after the onshore yuan last week strengthened 0.31 per cent to close at 6.6324 on Friday while offshore yuan gained 0.21 per cent to 6.6513 for the week.
The tepid economic growth added to market expectations that the central bank will either have to cut interest rates or slash the required reserve ratio.