China's Yuan Extends Loss as PBOC Weakens Fix, Easing Bets Mount
Bloomberg
Published Jul 19, 2018 00:38
Updated Jul 19, 2018 01:48
China's Yuan Extends Loss as PBOC Weakens Fix, Easing Bets Mount
(Bloomberg) -- China’s yuan fell to a one-year low, as the central bank showed little sign of intervening to slow the currency’s descent and bets for monetary policy easing mounted.
The yuan dropped 0.45 percent to 6.7760 per dollar, the lowest level since July 2017, in offshore trading. The People’s Bank of China weakened its fixing beyond 6.7 on Thursday for the first time since the currency began tumbling in June. Signs on further monetary easing are also adding strains, with China Business News reporting policy makers have made efforts to encourage bank loans and investment in lower-rated corporate debt.
Read about the latest sign of policy easing here.
The yuan has fallen more than 4 percent in the past month, the worst performance among 31 major currencies, as the world’s second largest economy showed signs of slowing and a trade spat with the U.S. escalated. China will tolerate higher volatility in the yuan and a moderate weakening of the currency, according to Pacific Investment Management Co.
The fixing "signals the PBOC is not defending any line in the sand for the exchange rate and is comfortable with gradual yuan depreciation," said Tommy Xie, an economist at Oversea-Chinese Banking Corp. in Singapore. The signs of easing are "certainly not supportive to the yuan, and the currency may see another wave of selling pressures ahead."
The banking and insurance regulator has also asked financial institutions to “earnestly implement” plans to help reduce financing costs for small firms. It said big lenders should “take the lead,” according to a statement posted on its website.
“The latest policies are indicating an easing bias, bringing additional pressure to the yuan,” said Zhou Hao, senior emerging market economist at Commerzbank AG (DE:CBKG) in Singapore. “If the PBOC doesn’t intervene heavily, there will be further downside.”
The government has made full preparation and preliminary plans for risks with cross-border capital flows, Wang Chunying, spokeswoman for the State Administration of Foreign Exchange, China’s top currency regulator, said at a press conference in Beijing on Thursday. The economy is resilient and provides a foundation for stability in the foreign-exchange market, she added.
On July 3, Chinese central bankers pledged to keep their currency stable and to not use it as a weapon in the trade conflict with the U.S. That effort helped the yuan reverse some of its plunge.
The onshore yuan dropped 0.29 percent to 6.7397 per dollar in Shanghai.
Get The App
Written By: Bloomberg
Trading in financial instruments and/or cryptocurrencies involves high risks including the risk of losing some, or all, of your investment amount, and may not be suitable for all investors. Prices of cryptocurrencies are extremely volatile and may be affected by external factors such as financial, regulatory or political events. Trading on margin increases the financial risks.
Before deciding to trade in financial instrument or cryptocurrencies you should be fully informed of the risks and costs associated with trading the financial markets, carefully consider your investment objectives, level of experience, and risk appetite, and seek professional advice where needed.
Fusion Media would like to remind you that the data contained in this website is not necessarily real-time nor accurate. The data and prices on the website are not necessarily provided by any market or exchange, but may be provided by market makers, and so prices may not be accurate and may differ from the actual price at any given market, meaning prices are indicative and not appropriate for trading purposes. Fusion Media and any provider of the data contained in this website will not accept liability for any loss or damage as a result of your trading, or your reliance on the information contained within this website.
It is prohibited to use, store, reproduce, display, modify, transmit or distribute the data contained in this website without the explicit prior written permission of Fusion Media and/or the data provider. All intellectual property rights are reserved by the providers and/or the exchange providing the data contained in this website.
Fusion Media may be compensated by the advertisers that appear on the website, based on your interaction with the advertisements or advertisers.