China's yuan fell to its lowest in more than five months against the dollar on Friday, hit by weaker central bank guidance and continuous seasonal corporate demand for the greenback. The Chinese currency, set for its worst week since November 2016, has erased all the gains it made this year.
"The losses in the yuan against the dollar this week reflect declines in the yuan basket index, with the US tariff announcement a trigger," a chief dealer at a Chinese bank said. The renminbi has lost more than 1,000 pips or about 1.6 percent from last Thursday's late night close, the day before US President Donald Trump threatened to impose new tariffs on Chinese goods.
Prior to market opening, the People's Bank of China (PBOC) lowered the midpoint rate for the third straight day to 6.4804 per dollar, the lowest since January 12, 98 pips weaker than the previous fix of 6.4706. The weaker fixing dragged the spot yuan lower. The spot market opened at 6.4929 per dollar and eased to a low of 6.5078 per dollar, the weakest since January 11. The yuan finished at 6.5069 on December 29, the last trading day of 2017.
As of midday, the onshore spot yuan was changing hands at 6.5045, 105 pips weaker than the previous late session close and 0.37 percent softer than the midpoint.
The Thomson Reuters/HKEX Global CNH index, which tracks the offshore yuan against a basket of currencies on a daily basis, stood at 97.53, weaker than the previous day's 97.82.
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