The yuan closed slightly lower against the dollar on Friday, under pressure from signs that global financial turmoil is hitting China's economy, dealers said, although the Chinese central bank's mid-point limited its fall. "The troubles of exporters and signs of slowing industrial activity indicate the impact of the global financial crisis on China's economy has become real," said a dealer at a Chinese commercial bank in Shenzhen.
"The central bank's efforts to maintain a stable yuan cannot be sustained if this situation persists." Several Chinese firms suspended fund-raising plans worth hundreds of millions of dollars on Friday, with many citing the weak stock market.
Growth slowed to 15.2 percent in the first nine months of the year, from 15.7 percent in the first eight months, implying that annual growth for September was well below the 12.8 percent pace in August. And analysts forecast that Chinese gross domestic product data to be released on Monday will show that annual growth dropped below 10 percent in the third quarter, compared with 10.1 percent in the second quarter and 11.9 percent in all of 2007.
The central bank, in an effort to prevent possible sudden capital outflows in the wake of falling asset prices, has been using its mid-point system to help keep the yuan stable in a range of roughly 6.82 to 6.85 to the dollar since mid-July.
That has helped the yuan to sharply outperform most Asian currencies. South Korea's won has plunged more than 30 percent since mid-July, when the US dollar began a powerful rebound on global markets. Before trade began on Friday, the central bank fixed the yuan's daily mid-point against the dollar at 6.8311, only marginally below Thursday's reference rate of 6.8295. The yuan closed at 6.8340 against the dollar, versus Thursday's close of 6.8297.
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