China's yuan falls as central bank sets weaker mid-point for second day

HONG KONG: China's yuan fell against the dollar on Thursday after the central bank set a weaker mid-point for the second consecutive day, but traders said supply and demand in the market was relatively balanced.

The yuan changed hands at 6.2145 per dollar at midday, down 0.08 percent from Wedenesday's close at 6.2094. It traded between a narrow range of 6.2110 and 6.2191.

The People's Bank of China (PBOC) set the yuan mid-point at 6.1465, down 0.04 percent from the previous day's 6.1440 and weaker than some analysts had expected.

"The market was quiet in the morning and dollar buying and selling was balanced," said a trader at a Chinese bank in Beijing.

"I don't think the yuan will regain strength until June, given China's faltering economy," said the trader, who expected the yuan to only appreciate about 1 percent this year.

A run of disappointing data showed China's economy lost steam at the start of 2014, and the country's first domestic bond default and subsequent media reports of trouble at other companies have added to pressure on its financial markets.

However, most analysts do not expect China to suffer a hard landing, noting there are plenty of instruments left to the government to cushion the negative impact from weak economic data.

"China will not have a hard landing and reform will not be derailed by market pressure. Beijing has been very smart in accommodating market forces in a controlled manner," Stuart Gulliver, group Chief Executive at HSBC said in a forum in Hong Kong on Thursday.

The string of weak data has heightened speculation that Beijing will announce stimulus measures to revive growth.