China central bank set yuan’s fixing rate at the weakest level in six years

The People’s Bank of China has set the mid-price of the yuan at 6.7858 on Friday morning, the weakest level in more than six years, extending the currency’s depreciating trend since early October.

The fixing of the rate was in line with the market’s expectations, and had induced some traders to abandon their long positions, said Stephen Innes, a senior trader at OANDA.

“Given the market’s current tangent, we should expect an uptick in near-term volatility after the US dollar broke convincingly higher overnight,” Vines said. “The market is undoubtedly positioning of a test of the 6.80 level.”

Offshore yuan strengthened to 6.7883 against the US dollar at 10.20 am. The offshore price had fallen to 6.7923 in earlier trading sessions this week, testing the critical 6.8 level. Onshore yuan strengthened to 6.7803.

The offshore yuan rate has been plumbing record lows since the October national holiday break, after Chinese policymakers set successively lower reference points to signal their willingness to allow for greater flexibility in the renminbi’s movement, amid exports decline and the strengthening of the US dollar.