The yuan ended slightly lower against the dollar on Monday as a global dollar rise offset China's better-than-expected foreign direct investment (FDI) data for May. The Commerce Ministry on Monday said China drew $6.4 billion in FDI in May, down 17.8 percent from a year earlier, but up from $5.9 billion in April.
The FDI figure came after China posted a series of data last week painting a mixed picture of the economy, including strong investment, industrial output and retail sales, but weakness in exports and in consumer and producer prices. "The economic data is largely in line with expectations, so the impact on the yuan's trading is limited," said a dealer at a European bank in Shanghai. He expected the yuan to stay in a range of 6.8200 to 6.8400 versus the dollar in the near term.
Spot yuan closed at 6.8364 against the dollar, down from Friday's close of 6.8338, with the US dollar index gaining nearly 1 percent in earlly European trade, when the Shanghai market was closing. Before trade began on Monday, the Chinese central bank fixed the yuan's daily mid-point at 6.8343, down slightly from Friday's 6.8325, reflecting the dollar's global rise over the weekend.
As China's economy shows signs of improvement but many indicators remain very weak, economists have become increasingly divided over whether a full recovery is in sight. Li Yang, a former adviser to the People's Bank of China, the central bank, said in remarks published on Monday that China's economy would not experience a rapid recovery because it would take time to find a new growth engine to replace sagging exports.
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