China's yuan posts biggest weekly loss on record
China's yuan held steady against the dollar on Friday, but posted its biggest weekly loss on record due to the central bank's surprise move to devalue its currency.
The People's Bank of China (PBOC) set the midpoint rate (CNY=SAEC) at 6.3975 per dollar prior to market open, firmer than the previous day's closing quote 6.399. The spot market (CNY=CFXS) closed at 6.3918 per dollar, 72 pips away from the previous close and 0.09 percent away from the midpoint. The yuan fell by 2.9 percent for the week. The yuan fell for three consecutive days and had repeatedly touched fresh four-year lows since Tuesday, when the PBOC surprised the market by devaluing the yuan by nearly 2 percent.
"We believe that yuan may reach new equilibrium at around 6.4-6.5 levels, but short term volatility may remain higher," said Suanjin Tan, a portfolio manager at BlackRock. Some banks revised down their forecast for the yuan to reach 6.5-6.6 by the end of the year.