The yuan closed weaker against the dollar on Wednesday after hitting a year-to-date low in late trading. The currency has depreciated 1 percent so far this year in reaction to a strengthening dollar. The dollar index reached its highest level since September 2010 in late Asian trade.
Spot yuan touched an intraday low of 6.3591 per dollar about five minutes ahead of the close, its lowest level since mid-December. It hit an intraday high of 6.3522 in early trade and closed at 6.3577, slightly weaker than Tuesday's close of 6.3480. The People's Bank of China (PBOC) set the yuan's midpoint at 6.3297 against the dollar, slightly weaker than Tuesday's 6.3262 but stronger than Tuesday's close, giving a clear signal that it may allow the yuan to depreciate but only at a controlled pace.
"China appears ready for a round of yuan depreciation," said a trader at a Chinese state-owned bank in Beijing. The yuan has shed 0.75 percent this month and 1 percent so far this year under pressure from a strengthening dollar as well as China's worse-than-expected economic slowdown.
Offshore one-year non-deliverable dollar/yuan forward contracts traded at 6.4145 in the afternoon session, implying a yuan depreciation of 1.32 percent to Wednesday's midpoint. Offshore spot yuan was trading around 6.3555 in late trade, slightly stronger than the onshore spot yuan.
Comments
Comments are closed.