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SHANGHAI: China’s yuan weakened on Thursday against the US dollar, following data that showed persistent weakness in property sector, suggesting an uneven recovery in the world’s second-largest economy.

While October data this week showed the industrial and retail sectors making a comeback, a sharp drop in property investment and weak new home prices pointed to a struggling real estate sector that remains a drag on the economy.

“Optimism for the yuan remains aligned with that of the Chinese economy,” said Philip Wee, senior FX strategist at DBS, adding that recovery hopes were also dampened by negative export and inflation data.

Prior to the market opening, the People’s Bank of China set the midpoint rate, around which the yuan is allowed to trade in a 2% band, at 7.1724 per US dollar, the firmest level since Sept. 27.

The spot yuan opened at 7.2550 per dollar and was changing hands at 7.2603 at midday, 134 pips weaker than the previous late session close and 1.23% away from the midpoint.

China’s yuan hits two-month high on better economic data, cooling US inflation

The spot rate is currently allowed to trade with a range 2% above or below the official fixing on any given day.

The offshore yuan was weaker against the dollar in late trade on Wednesday after touching its strongest level in three months, as US retail sales fell less-than-expected.

The offshore yuan was 39 pips weaker than the onshore spot at 7.2642 per dollar.

A closely watched meeting between US President Joe Biden and Chinese President Xi Jinping in San Francisco has not had any major impact on the yuan.

Maybank analysts said the market is more interested in news around restrictions on China’s access to US technology rather than any new promises.

The global dollar index rose to 104.528 from the previous close of 104.394.

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