HONG KONG: China’s yuan languished near a two-week low against the dollar on Wednesday, pressured by concerns over the economic impact of U.S. tariffs and the threat of more duties on Chinese goods.
By 0300 GMT, the yuan was 0.07% lower at 7.2643 to the dollar, its weakest level since March 10.
The offshore yuan traded at 7.2712 yuan per dollar, down about 0.06% in Asian trade.
Markets remain on tenterhooks as they look ahead to next week, when U.S. President Donald Trump is expected to announce more tariffs targeting auto and chips industries.
China’s economic growth is likely to moderate in the second quarter as the U.S. tariff impact deepens and the effect of the current stimulus fades, said Ju Wang, head of FX and rates strategy for Greater China at BNP Paribas, in a note to clients.
The People’s Bank of China earlier this week said that it will issue 450 billion yuan of one-year medium-term lending facility, which will alleviate the local banks’ funding pressures slightly, she added.
“This nuanced monetary easing bias could add to the RMB’s near-term weakness.”
Yuan hits two-week low against dollar
Prior to the market opening, the PBOC set the midpoint rate, around which the yuan is allowed to trade in a 2% band, at 7.1754 per dollar, 805 pips firmer than a Reuters’ estimate.
The Chinese yuan has risen 0.3% against the dollar this month and is up 0.5% year-to-date, as the dollar rally loses momentum with the fading of the U.S. exceptionalism trade.
The dollar’s six-currency index inched higher to 104.27 on Wednesday. It dipped to a five-month low of 103.19 last week, weighed down by worries that Trump’s trade war could trigger a U.S. recession.
Chinese government 10-year bond yields fell 0.7 basis point to 1.89%. The yield on similar U.S. government benchmark debt was 4.3%. The yuan onshore 7-day benchmark repo rate was at 1.94%.
Comments
Comments are closed for this article.