The yuan ticked up against the dollar on Monday but stayed below its record high of last week, as the People's Bank of China signalled that strong yuan appreciation is not on the cards for now amid signs China's economy is slowing in line with global weakness.
The central bank set its daily mid-point, via which it expresses the government's intention for the yuan's movements, two pips weaker on Monday than Friday. Spot yuan closed at 6.2971 versus the dollar, 15 pips stronger than 6.2986 at the close on Friday, when it hit an all-time high of 6.2884 per dollar in intraday trading.
The marginally stronger yuan occurred despite the PBOC yuan's slightly weaker mid-point of 6.2939 against Friday's record high of 6.2937. In the offshore non-deliverable forward (NDF) market, one-year NDFs implied yuan appreciation of 0.40 percent by late afternoon Monday, virtually unchanged from 0.38 percent implied on Friday.
The PBOC set a record high fixing last week, which was viewed by the market as a goodwill gesture ahead of Chinese leader-in-waiting Xi Jinping's visit to the United States this week. The yuan has previously staged some appreciation during state visits of the two countries' top leaders.
The Chinese currency typically pulls back after the winding-up of such visits. In other bearish news, China reported that Chinese banks lent 738.1 billion yuan ($117.3 billion) worth of new loans in January, compared with market expectations of 1 trillion yuan.
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