Onshore yuan seesaws after PBOC cuts fixing, July trade declines

The onshore yuan strengthened against the US dollar amid choppy trade on Monday morning, while the offshore rate weakened after the People’s Bank of China lowered its daily reference rate for the currency.

The PBOC set the yuan’s mid-point rate at 6.6615 against the US dollar, weaker by 209 pips (percentage in point) from the previous fix.

Onshore yuan opened lower against the US dollar, but then reversed losses and rose 0.04 per cent to 6.6577 per US dollar at 11.40 am.

In the meantime, offshore yuan fell to 6.6683, softer by 0.03 per cent from the previous close.

Stephen Innes, a senior trader at Oanda Asia Pacific, said the yuan could experience some volatility this week.

“This week’s heavy economic calendar, along with a sudden shift in US rate hike expectations, could be a precursor to another bout of yuan weakness,” said Stephen Innes, a senior trader at Oanda Asia Pacific.

Earlier on Monday, official data showed China’s July exports and imports both declined more than expected in US dollar terms, down 4.4 per cent and 12.5 per cent respectively from the same period a year earlier.

China is due to release a series of important economic data later this week, including CPI, PPI, industrial production, retail sales, and fixed-asset investment.

This coming Thursday will mark the one-year anniversary of the yuan’s abrupt depreciation on August 11, 2015, when the PBOC cut the USD/CNY fixing rate by 1.9 per cent to 6.2298, the largest ever in history.