The yuan slipped against the dollar on Monday, in line with a weaker central bank midpoint, though traders said China's tepid but slightly better-than-expected third quarter GDP data capped the currency's fall. "There was some yuan sales in early trade as investors took a defensive tactics ahead of the GDP data," said a trader at a foreign bank in Shanghai. "But the yuan became relatively stable after the data was posted."
China said its gross domestic product (GDP) grew 6.9 percent in the third quarter from a year earlier, the weakest quarterly growth since 2009. Still, the data was slightly better than analysts' forecast of 6.8 percent. Prior to market open, the People's Bank of China set the midpoint rate at 6.3527 per dollar, 0.14 percent weaker than the previous fix 6.3436.
The spot market opened at 6.3600 per dollar and was changing hands at 6.3609 at midday, 0.13 percent weaker than the previous close. Data issued on Friday showed that the PBOC and commercial banks sold a record net 761.3 billion yuan ($119.70 billion) of foreign exchange in September. The central bank has been using its foreign exchange reserves this year to support the yuan, in particular after a surprise August 11 devaluation intensified pressure on the currency.
Still, the yuan appears to have gradually stabilised since September, as partly indicated by the latest figures published by the Bank for International Settlements (BIS). The decline of the yuan's real effective exchange rate (REER), or the currency's value against the trade-weighted basket after adjustments based on inflation, eased 0.32 percent in September, the BIS data issued on Friday showed. The easing, however, was less than a 0.61 percent weakening in August. The offshore yuan was trading 0.15 percent weaker than the onshore spot at 6.37 per dollar.