China's yuan on Monday ended the official domestic trading session at its lowest level in six months following the central bank's cut in some banks' reserve requirements in order to boost lending. The spot yuan market opened at 6.5200 per dollar, weakened to a low of 6.5416 at one point before settling at 6.5240 at the closing bell at 0830 GMT, the weakest such close since December 28.
If the onshore spot yuan ends the late night session at its domestic close, it would have lost 0.44 percent against the dollar for the day.
On Sunday, the People's Bank of China (PBOC) said it would cut the reserve requirement ratio (RRR) for what some banks must keep in reserves by 50 basis points (bps), releasing $108 billion in liquidity, partly to spur lending to smaller firms.
Market watchers said news of the targeted RRR cut weighed on sentiment on Monday, but they do not expect a strong one-way depreciation bet in the Chinese currency to emerge any time soon as the PBOC still has plenty of tools to keep the yuan from falling too fast.
"The bottom line is that the PBOC will maintain the RMB steady outlook to push forward" China's opening up and yuan internationalization this year, said Ken Cheung, senior Asian FX strategist at Mizuho Bank in Hong Kong. Offshore yuan also followed Monday's onshore weakening trend, posting its eighth straight day of losses. It was trading at 6.5470 per dollar as of 0900 GMT.
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