HONG KONG: China's yuan slipped on Monday after its central bank fixed the daily trading midpoint against the dollar at its weakest level since September in a sign that it would continue to keep a strict vigil on any speculative capital inflows.
While capital inflows in search of carry and an appreciating currency have slowed in recent weeks thanks to the People's Bank of China's policy to actively weaken its currency and widen its trading band, they still remain robust by historical standards.
On Monday, the yuan slipped to 6.2372 per dollar compared with Friday's close of 6.2365 in response to the People's Bank of China fixing its daily trading midpoint to
6.1699 per dollar, its weakest level since Sept. 6, 2013.
A slight rebound in the yuan's value so far this month may have prompted some buyers.
The yuan has rebounded 0.4 percent against the dollar so far in May after the central bank engineered a 3.3 percent depreciation in the currency in the first four months of 2014 to deter speculators from betting on a non-stop yuan rise.
China's central bank and commercial banks purchased 116.9 billion yuan of foreign exchange on a net basis in April, less than half of the previous year indicating the impact of Beijing's policy to weaken its currency.
But some analysts were wary of reading too much into the spate of recent weak fixes with Sacha Tihanyi, senior currency strategist at Bank of Nova Scotia saying the shifts in fixings were "too small and gradual" to signal any policy change.
Bearish sentiment on the yuan has risen slightly on concerns that China's growth may be cooling more rapidly than earlier expected, a Reuters poll showed on Thursday. The Chinese currency has been suffering bearish bets since mid-March in the Reuters' bi-weekly survey.
Volumes are expected to be muted ahead of the official manufacturing PMI data due on the weekend and holidays in the U.S and the UK.
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