China’s yuan weakens past key threshold to 2-month low after slew of downbeat economic data
- China’s onshore yuan finished the domestic session on Friday at 6.9506 per US dollar, the weakest close since March 10
- The weakness followed a slew of downbeat data, suggesting that China’s economic recovery might have lost some steam
China’s yuan weakened past a key threshold to a new two-month low against the US dollar on Friday before steadying as exporters rushed to settle their foreign exchange receipts and lock in profits.
The yuan breached the psychologically important level of 6.95 per US dollar in early trading, as losses accelerated after the spot rate crossed the 200-day moving average of 6.94.
However, currency traders said corporate clients emerged as US dollar sellers after the yuan weakened above the key 6.95 per US dollar level, in a move anticipated by analysts at Barclays.
Chinese exporters have been hoarding dollar receivables
“Chinese exporters have been hoarding dollar receivables,” Barclays analysts said last week.
“We see 6.95 as first resistance level for [the exchange rate], as exporters could sell dollar holdings at these levels.”
Before the market opening, the People’s Bank of China (PBOC) set the midpoint rate at a two-month low of 6.9481 per US dollar, 380 pips or 0.55 per cent weaker than the previous fix of 6.9101.