Yuan set for biggest monthly loss since devaluation
The yuan fell, heading for the steepest monthly decline since the August devaluation, after the Federal Reserve chief said an interest-rate increase could come in the next few months.
The yuan declined 0.26 percent to a three-month low of 6.5823 at 4:37 p.m. in Shanghai, extending losses this month to 1.55 percent. The People’s Bank of China cut the fixing by 0.45 percent to 6.5784 per dollar, the weakest level since February 2011, after the greenback strengthened. The U.S. currency is poised for the biggest monthly gain since September 2014 as Fed Chair Janet Yellen said on Friday higher interest rates in the coming months look “appropriate.”
“The dollar was further underpinned by Yellen’s comments about an ‘appropriate’ rate hike in the coming months last Friday, which led to more pressures for RMB to weaken against the dollar,” said Tommy Xie, a Singapore-based economist at Oversea-Chinese Banking Corp.
While the yuan slumped amid concern higher U.S. interest rates will spur outflows of the Chinese currency, the fixing is becoming more predictable as it appears the PBOC is allowing market forces to play a bigger role in setting the daily rate, according to OCBC.
The central bank said in its quarterly monetary policy report that the fixing is decided both by the closing price and the performance of a basket of currencies. The reference rate is now decided by the PBOC based on 14 lenders’ submission of quotes, Sun Wei, deputy general manager of financial markets at China Citic Bank Corp., said in an interview.
Wider Band
“The fact that we are able to forecast the daily fixing more accurately shows that the yuan has been more predictable than unpredictable as the PBOC has been following its revised fixing mechanism closely in the past few weeks,” Xie said.
The yuan trading in Hong Kong fell 0.21 per cent to 6.5899 per dollar, its lowest level since Feb. 3 and extending four weeks of losses in a row. The spread between the onshore and offshore rates, a gauge of depreciation pressure, narrowed to 0.0076, or 76 pips, after touching the widest level in three months on May 18. A Bloomberg replica of the CFETS RMB Index rose 0.09 percent to 97.29 on Monday, after snapping a two-week gain last week.
China should quietly allow wider moves in the yuan against a basket of currencies, a strategy that will reduce the cost of limiting declines, according to Yu Yongding, a former PBOC adviser.
“The currency basket should be allowed to fluctuate within a big band, at least 20 percent,” Yu said in Singapore on Friday.
Foreign Access
Get the latest news delivered straight to your inbox every day of the week. Stay informed with the Guardian’s leading coverage of Nigerian and world news, business, technology and sports.
1 Comments
Dàn-góte3xCèmént is now sóld from fàctories for prómo pricé of 1000 Nairá per bàg, Buyérs cán ōrder a minimum of 100 bágs Tráiler Lōad of 600 bågs and 900 bàgs and above contáct sáles manàger Mr Joseph on 07033467751 or Assistànt sáles managér Mrs Bola Balogun On 08038547919 to get 50kg ricé for 7500 Náira Minimum of 20bágs and above.Note that Délivery that’s at list 24hours Working Days and it is nation. wild.
Dáñgote Sugar:#5000 per bâg.
Dáñgote Flour:#6500 per båg
We will review and take appropriate action.