Yuan falls for 3rd day against dollar
Print Edition
THE yuan weakened against the United States dollar for a third straight day yesterday after the central bank adjusted the reference rate to its lowest level in more than two months.
The Chinese currency closed at 6.5440 yuan to the dollar at 4:30pm in Shanghai, its lowest since early March and down from Wednesday’s close of 6.5353.
The People’s Bank of China earlier cut the central parity rate to 6.5531 yuan to the dollar from Wednesday’s 6.5216.
The yuan is allowed to move 2 percent either side of the daily rate.
The central bank’s move reflected the dollar’s overnight rebound after the US Federal Reserve earlier raised the possibility of a interest rate rise in June, putting emerging market currencies under pressure.
The South Korean won and Malaysian ringgit also fell to their weakest levels since March, while the Indonesian rupiah and Thai baht hit their lowest points since February.
Analysts said the central bank has a greater tolerance for yuan depreciation, pressure for which has been mounting for weeks.
“The economic recovery seen in the first quarter and driven by stimulus measures has come to a halt, and a shift of domestic policy and a weakening economy have resulted in greater depreciation pressure,” Hua Chuang Securities said in a report.
“The official exchange rate is likely to follow the market rather than guiding it in times of depreciation,” it said.
HSBC said earlier that China’s central bank might soon relax its foreign exchange policy, as capital outflow pressures have subsided.
Major economic indicators for April showed growth slowing in exports, manufacturing, credit expansion, industrial output, retail sales and fixed-asset investment.
Meanwhile, the central bank yesterday gave the green light for a first batch of six offshore banks to begin directly trading the yuan on the interbank market for trade settlement purposes from today.
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