China's yuan was on course for its worst day in more than a year as it weakened against the dollar at the domestic close on Thursday. Traders attributed the weakness in the Chinese currency to rising demand for dollars ahead of the Lunar New Year and a narrowing of China's trade surplus in January.
"The initial bid came on trade data, but the big ramp up came on news wires citing unnamed sources saying China will lift a two-year suspension on foreign funds raising money in China to invest overseas (reviving Qualified Domestic Limited Partnership), a sign that China is less anxious about capital outflow pressures and may well be uncomfortable about CNY strength," Elsa Lignos, global head of FX Strategy at RBC Capital Markets, said in a note.
The spot market opened at 6.2850 per dollar and fell to a low of 6.3550 at one point in afternoon trade, reflecting the dollar's rebound in overseas markets. By the closing bell, the onshore spot yuan settled at 6.3260 per dollar, compared with the previous local close of 6.2596.
If the onshore spot yuan ends the late night session at its domestic close, it would have lost 0.68 percent against the dollar for the day, the worst daily performance since January 6, 2017.