China’s yuan slips to 17-month low against US dollar as economic pressures mount

The yuan has fallen by nearly 4 per cent against the US dollar this month, putting it on track for what could be its biggest drop since China unified exchange rates in 1994

The Bank of Japan on Tuesday added fuel to the fire, propelling the US dollar higher as it said it would keep interest rates ultra-low and maintain massive stimulus

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With few other signals that the PBOC is uncomfortable with a softer yuan, market participants remain uncertain whether the bank has a clear “red line” for depreciation. Photo: AP

Published: 2:51pm, 28 Apr 2022Updated: 6:26pm, 28 Apr 2022

China’s yuan slipped to nearly a 17-month lows against the US dollar on Thursday as widening coronavirus lockdowns put more pressure on the slowing economy, and as the US dollar continued to surge.

The Bank of Japan on Tuesday added fuel to the fire, propelling the US dollar higher as it said it would keep interest rates ultra-low and maintain massive stimulus.

The US dollar-yen pair rose to a 20-year high and the US dollar index jumped following the announcement.

The yuan’s slump followed two days of relative stability after the People’s Bank of China (PBOC) on Monday cut banks’ foreign exchange reserve requirements in a move to put a floor under recent steep falls.

It also comes as officials in Beijing embarked on more mass testing aimed at averting a Shanghai-like lockdown that has hobbled economic activity in the country’s financial hub.

With few other signals that the PBOC is uncomfortable with a softer yuan, market participants remain uncertain whether the bank has a clear “red line” for depreciation.

On Thursday, the PBOC once again set the yuan’s daily midpoint fixing close to market forecasts, at 6.5628 per dollar. That was its weakest since April 2, 2021.

The onshore spot yuan closed at 6.6115 per US dollar, its softest level since November 13, 2020.