SHANGHAI: China’s yuan eased against the dollar on Friday following weaker guidance from the central bank, which market participants read as indication authorities may be willing to tolerate falls in the currency.
Investors did not take much cheer from a survey that showed an unexpected pickup in Chinese factory activity in November, with the offshore yuan making brief gains after the report before shedding them.
“Any reaction in the USD/CNH was short-lived as markets may still be uncertain about a bottoming out or stabilization in China’s economy,” Maybank analysts said in a note.
Prior to the market’s opening, the People’s Bank of China set the midpoint rate, around which the yuan is allowed to trade in a 2% band, at 7.1104 per US dollar, 86 pips weaker than the previous fix 7.1018. That was the largest daily weakening by percentage terms in more than two months.
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