SHANGHAI: China’s yuan slipped to nearly a one-week low against the dollar on Monday, as investors grew cautious ahead of domestic factory activity data and a Federal Reserve meeting later this week.
The yuan barely budged but market sentiment was dampened after a Hong Kong court ordered that property giant China Evergrande Group be liquidated, traders and analysts said.
The liquidation “at least reminds investors of China’s property downturn,” said Ken Cheung, chief Asian FX strategist at Mizuho Bank.
Prior to the market’s opening, the People’s Bank of China (PBOC) set the midpoint rate, around which the yuan is allowed to trade in a 2% band, at 7.1097 per dollar, 23 pips weaker than the previous fix of 7.1074.
The central bank continued with its months-long practice of setting the official guidance rate at firmer levels than the market’s projections, traders and analysts said, widely seen as an attempt to keep the currency stable.
Monday’s midpoint was 659 pips firmer than a Reuters estimate of 7.1785.
In the spot market, the onshore yuan opened at 7.1780 per dollar and slipped to a low of 7.1833, the weakest level since Jan. 23. By midday, it was changing hands at 7.1825, 40 pips softer than the previous late session close.
Traders said dollar movements and stabilisation in mainland listed A shares - on Beijing’s support policies, including a cut in bank reserves - have been among key factors guiding the yuan.
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