SHANGHAI: China's yuan eased to a 10-day low against the dollar on Monday, as worsening COVID-19 infection numbers across the country and fresh mobility restrictions dented market sentiment.
Official data showed that China had 27,095 new COVID infections on Nov. 20, the most in more than seven months.
Beijing's most populous district urged residents to stay at home on Monday, extending a request from the weekend as the city's COVID-19 case numbers rose. Many businesses in the district were shut and schools shifted classes online.
While an easing of pandemic-control measures had been a positive development, the near-term challenge was containing rising case numbers, Lin Li, head of global markets research for Asia at MUFG Bank, wrote in a note to clients.
COVID disruptions were among key factors weighing on the health of the world's second largest economy, which fundamentally affects the currency, traders said.
Prior to market opening, the People's Bank of China (PBOC) set the midpoint rate at a 10-day low of 7.1256 per dollar, 165 pips or 0.23% weaker than the previous fix, 7.1091.
In the spot market, the onshore yuan opened at 7.1451 per dollar and weakened to a low of 7.1708, the softest level since Nov. 11. By midday, it was changing hands at 7.1616, 456 pips weaker than the previous late session close.
Traders said the market had become cautious due to recent domestic COVID developments, while future interest rate rises by Federal Reserve are back in focus, supporting the dollar.
"Markets will also closely monitor US economic data to gauge the Fed's tightening trajectory and the dollar's movements," said a trader at a foreign bank.
Investors will be keenly interested in minutes from the Fed's November meeting due to be released on Wednesday, which could shed light on how far officials ultimately expect to raise interest rates.
Around midday, the global dollar index had risen to 107.254 from the previous close of 106.93, while the offshore yuan was trading at 7.1666 per dollar.
Comments
Comments are closed.