Onshore yuan extends losing streak to third day as dollar strengthens
PBOC weakens the yuan’s reference rate by 47 basis points
The onshore Chinese yuan weakened further on Tuesday, completing a three-day losing streak, as the US dollar firmed against its major currency rivals.
The spot yuan closed at 6.8826 per US dollar at 4.30pm in Shanghai, down 0.06 per cent or 44 basis points. It had fallen for two straight sessions before Tuesday.
The offshore yuan in Hong Kong also fell 0.2 per cent or 104 basis points to 6.8678 in the afternoon session.
The declines came after the People’s Bank of China weakened the yuan’s mid-point rate to 6.879 per US dollar, down 47 basis points from the previous rate. In the previous session, the PBOC cut the reference rate by the most in six weeks.
In other forex markets, the US dollar continued to gain ground against its major currency rivals.
The ICE US Dollar index, or DXY, which measures the greenback’s strength against a basket of six rival currencies, advanced 0.4 per cent to 101.3.
Against the Japanese yen, the US dollar was up 0.4 per cent or 43 basis points to ¥113.5.
The euro dropped 0.5 per cent or 48 basis points to US$1.0565. Sterling also weakened 0.3 per cent to US$1.2425.
Analysts said investors will look for clues as to the pace of interest rate increases from a batch of US Federal Reserve speakers and a scheduled release of Fed minutes this week.
“I sense a subtle shift from Trump headlines that drove risk, to a more Fed-led focus as the game of words should accelerate this week with the plethora of Fed-speak leading up to the FOMC minutes release,” said Stephen Innes, a senior trader at Oanda Asia Pacific.
However, he said it’s “doubtful” the Fed minutes will give a clear signal about the possibility of a March rate move and the US dollar could risk pulling back after its recent rally.
Additional reporting by Jennifer Li