China’s yuan snaps three days of gains

Analysts say China’s currency seems unlikely to break the 7-mark within this year

PUBLISHED : Thursday, 22 December, 2016, 11:45am
UPDATED : Thursday, 22 December, 2016, 11:45am

China’s currency weakened on Thursday morning, ending three days of gains against the US dollar.

The onshore yuan in Shanghai traded at 6.9460 per US dollar at 9.50 am, weaker by 0.1 per cent or 67 basis points. The offshore yuan in Hong Kong also dropped 0.14 per cent or 97 basis points to 6.9382 per US dollar.

On Thursday, the People’s Bank of China set the yuan’s reference rate at 6.9435 against the greenback, stronger by 54 basis points or 0.078 per cent than Wednesday’s fix.

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

The yuan has stabilised recently after sharp declines late last week, following the US Federal Reserve’s decision to raise its benchmark interest rate by 25 basis points and its projection of three interest rate rises in 2017.

Li Liuyang, chief analyst at Bank of Tokyo-Mitsubishi UFJ, said in a report on Thursday that it may be less likely for the Chinese yuan to break the 7-mark against US dollar within this year, as the Chinese authority has been trying to slow the yuan’s depreciation.

On Thursday, the overnight Shanghai Interbank Offered Rate, or SHIBOR, dropped 0.4 basis point, or 2.3410 per cent.

In the bond market,the benchmark 10-year Treasury futures for March delivery added 0.08 per cent, while the 5-year Treasury futures for March delivery traded flat.