SHANGHAI: China’s yuan weakened on Friday after an official factory survey showed the country’s manufacturing activity unexpectedly contracted in May, while traders were also cautious ahead of a key US inflation report later in the day.
Prior to the market open, the People’s Bank of China set the midpoint rate, around which the yuan is allowed to trade in a 2% band, at 7.1088 per US dollar, firmer than the previous fix at 7.1111.
The spot yuan opened at 7.2220 per dollar and was changing hands at 7.2412 at midday, 92 pips weaker than the previous late session close.
The session got off to a shaky start after China’s official purchasing managers’ index (PMI) fell to 49.5 in May from 50.4 in April, below the 50-mark separating growth from contraction and missing a median forecast of 50.4 in a Reuters poll. The soft outcome kept alive calls for fresh stimulus to boost the economy.
The offshore yuan was trading at 7.2543 per dollar.
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