China's yuan softened on Friday, but its decline was partly cushioned by a defensive dollar, as investors brace for further depreciation in the Chinese currency in the longer term. The market expects the yuan to face downward pressure from China's slowdown and with US interest rates poised to rise, although the Chinese central bank has reaffirmed its pledge to maintain the yuan's stability. The spot market opened at 6.6778 per dollar and was changing hands at 6.6793 at midday, 13 pips weaker than the previous close.
The Thomson Reuters/HKEX Global CNH index, which tracks the offshore yuan against a basket of currencies on a daily basis, stood at 95.04, weaker than the previous day's 95.26. The offshore yuan was trading -0.14 percent away from the onshore spot at 6.6885 per dollar.