SHANGHAI: China’s yuan eased on Friday after strengthening to a one-month high, as the central bank set a mild guidance rate.
Also weighing on sentiment, trade data late in the morning was mixed, with the country’s exports rising more than expected in June, while imports unexpectedly shrank, highlighting persistently weak domestic demand.
By 0350 GMT, the yuan was 0.09% lower at 7.2639 to the dollar after trading in a range of 7.2575 to 7.2677.
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 7.1315 per dollar, 1,199 pips firmer than a Reuters’ estimate.
The gap between estimate and PBOC’s fixing rate was narrower than Thursday’s 1,391 pips, showing the central bank was “potentially allowing more room for two-way moves in the USDCNY (dollar yuan pair),” said Maybank analysts in a note.
The central bank has been gradually lowering its daily yuan official guidance, well within market projections but with a bias suggesting it is allowing some depreciation, traders and analysts said.
The spot yuan opened at 7.2575 per dollar and was last trading 71 pips firmer than the previous late session close and 1.86% weaker than the midpoint.
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