SHANGHAI: China’s yuan weakened against the dollar on Tuesday, pulling back from the previous day’s six-week high after lower guidance from the central bank and a stronger greenback overnight.
The yuan is down 1.7% this year, pressured by its relative low yields versus other currencies and a struggling property market.
Prior to the market’s opening, the People’s Bank of China (PBOC) set the midpoint rate, around which the yuan is allowed to trade in a 2% band, at 7.1002 per US dollar, 8 pips weaker than the previous fix 7.0994.
“I would expect that the PBOC is unlikely to attempt to drive USD/CNY much lower through the daily fixes despite the US dollar’s current soft patch,” said Alvin Tan, head of Asia FX strategy at RBC Capital Markets.
“The economy will require further support to achieve the year’s ‘around 5%’ growth target,” Tan said.
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