(CTN News) – China’s yuan weakened on Friday after reaching a one-month high as the central bank set a low guideline rate.
Conflicting trade statistics late in the morning also impacted optimism. The country’s exports grew more than expected in June, but imports unexpectedly fell, underscoring stubbornly low domestic demand. By 0350 GMT, the yuan was down 0.09% at 7.2639 to the dollar, trading from 7.2575 to 7.2677.
Before the market started, the People’s Bank of China fixed the midpoint rate, around which the yuan can trade in a 2% band, at 7.1315 per dollar, 1,199 pips higher than a Reuters estimate.
According to Maybank analysts, the difference between the estimate and the PBOC’s fixing rate was less than 1,391 pips on Thursday, indicating that the central bank was “potentially allowing more room for two-way moves in the USDCNY (dollar yuan pair).”
Traders and analysts said the central bank has steadily reduced its daily yuan official guidance, which is well within market expectations but with a bias indicating that it is permitting some depreciation.
The spot yuan opened at 7.2575 per dollar and was last trading 71 pips higher than the previous late-session close and 1.86% lower than the midpoint.
This month, the yuan is up 0.1% against the dollar, although it is down 2.2% yearly. It has been under pressure since early 2023, as a prolonged property crisis, weak consumption, and declining rates force capital out of the yuan and keep foreign investors away from the country’s faltering stock market.
The dollar was on the defensive. The dollar index, which measures the US currency against six rivals, was at 104.47, close to the one-month low of 104.07 set on Thursday.
The dollar plummeted after data indicated that US consumer prices fell for the first time in four years in June, firmly putting disinflation back on track and bringing the Federal Reserve another step closer to reducing interest rates in September.
According to Friday’s official advice, the yuan can fall as low as 7.2741.
The offshore yuan traded 7.2755 yuan per dollar, down roughly 0.08% in Asian trade.
Source: Recorder
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