Yuan touches six-year low against dollar
SHANGHAI: China’s yuan touched a six-year low against the dollar before partially recovering yesterday, as large state-owned banks sold dollars in an apparent effort to slow a rapid decline in the currency, traders said.
Three traders said big stateowned banks were selling dollars in the domestic foreign exchange market to help stabilise the yuan in morning trade.
Some traders suspect that stateowned banks occasionally sell dollars on behalf of the central bank to keep the yuan from sliding too quickly, while others believe big banks trade on their own behalf.
The yuan has encountered renewed pressure over the past two weeks as the dollar strengthened, buoyed by expectations that the US Federal Reserve would raise interest rates in December.
The yuan settled at 6.7718 per dollar at 4.30pm, hitting a low of 6.7770 earlier in the session, compared with Friday’s official close of 6.7599. The yuan’s late session close on Friday stood at 6.7655.
China takes the market closing price at 4.30pm into consideration when it fixes the official guidance rate, in an effort to let market forces play a bigger role in determining the yuan’s value. – Reuters