Bank of China weak­ens yuan to 8-year low

The Myanmar Times - - International Business -

CHINA weak­ened the yuan’s fix against the dol­lar to an al­most eight-year low yes­ter­day as the surg­ing dol­lar put fur­ther pres­sure on the unit. The cen­tral Peo­ple’s Bank of China set the value of the yuan – also known as the ren­minbi – at 6.8495 to the green­back, down 0.30 per­cent from the pre­vi­ous day’s fix­ing, ac­cord­ing to data from the For­eign Ex­change Trade Sys­tem.

The unit has reached a se­ries of six-year lows in re­cent weeks in the face of a green­back ris­ing on ex­pec­ta­tions of sharper US in­ter­est rate hikes, with Pres­i­dent-elect Don­ald Trump pledg­ing to ramp up spend­ing and cut taxes.

But yes­ter­day’s fix was the weak­est since De­cem­ber 2008, and beyond the roughly 6.83 level at which Bei­jing vir­tu­ally pegged the unit for nine months in 2009-10.

China only al­lows the yuan to rise or fall 2pc on ei­ther side of the daily fix, one of the ways it main­tains con­trol over the cur­rency.

Dur­ing the US pres­i­den­tial cam­paign Mr Trump re­peat­edly ac­cused China of keep­ing the yuan un­der­val­ued to boost ex­ports and make im­ports from the US more costly, and has threat­ened to de­clare Bei­jing a cur­rency ma­nip­u­la­tor once he is in of­fice.

But an­a­lysts and of­fi­cials say that Bei­jing is now in­ter­ven­ing in the op­po­site di­rec­tion, and try­ing to prop up the unit’s value against a strength­en­ing green­back.

The US Trea­sury in Oc­to­ber cleared China of keep­ing the yuan cheap for trade ad­van­tages, say­ing the cur­rency could have fallen more had Bei­jing not acted. Bar­clays fore­casts that the on­shore yuan will fall to 7.15 against the dol­lar by the end of the third quar­ter next year.

The bank’s Sin­ga­pore-based head of Asia FX and rates strat­egy Mi­tul Kotech said the yuan was ba­si­cally track­ing moves by the dol­lar.

The on­shore yuan was quoted at 6.8586 in trad­ing yes­ter­day, 0.26 per­cent weaker than Novem­ber 14’s close of 6.8409.

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