HONG KONG: China’s yuan softened and hovered around a three-week low against the US dollar on Wednesday, as the country’s central bank set the official guidance rate at the weakest level in nearly three months and the greenback held firm.
The dollar has been supported by Federal Reserve officials’ cautious remarks this week on the outlook for inflation and interest rates, putting pressure on Asian currencies.
Prior to the market’s open, the People’s Bank of China set the midpoint rate, around which the yuan is allowed to trade in a 2% band, at 7.1077 per US dollar, the weakest level since Feb. 26 though still much firmer than market expectations. A pullback in China and Hong Kong stocks also contributed to the currency’s weakness, analysts say.
Spot yuan opened at 7.2389 per dollar and was changing hands at 7.2393 at midday, 16 pips away from the previous late session close and 1.85% away from the midpoint.
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