China’s yuan weakens as concern about capital outflows, economic slowdown grows

China’s central bank set the yuan midpoint at 6.4098 per US dollar on Thursday, a 0.3 per cent fall since the start of the week and a 1 per cent decline this month

Capital outflows, triggered by market expectations of more aggressive rate rises in the US and Europe this year, have alarmed officials in Beijing

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The People’s Bank of China set the yuan midpoint at 6.4098 per US dollar on Thursday, a 0.3 per cent fall since the start of the week. Photo: Shutterstock

Published: 11:00pm, 21 Apr 2022Updated: 11:49pm, 21 Apr 2022

China on Thursday lowered its official yuan midpoint, with the onshore trading rate at its lowest since October, a sign authorities may have already taken action to relieve pressure caused by economic headwinds and the US Federal Reserve’s decision to hike rates.

Capital outflows, triggered by market expectations of more aggressive rate rises in the US and Europe this year, have alarmed officials in Beijing and led President Xi Jinping to warn of negative policy spillover from “some countries” during an address to the Boao Forum on Thursday.

The People’s Bank of China set the yuan midpoint at 6.4098 per US dollar on Thursday, a 0.3 per cent fall since the start of the week and a 1 per cent decline this month.

The offshore yuan retreated to 6.4765 per dollar from 6.3818 on Tuesday, after March economic data showed signs of a worsening slowdown because of coronavirus lockdowns in Shanghai and other large Chinese cities.

Domestic foreign exchange trading touched 6.45 per dollar – the lowest level since October.