China’s yuan hit its lowest since offshore trading was introduced in 2010 on Tuesday as the dollar remained strong across the board, trading near a nine-month high on expectations for a US interest rate hike by year-end.
The Chinese currency’s fall of more than 1.5 per cent since the end of September has prompted renewed suspicion among some in the market of a possible extended slide in the Chinese currency. It traded as weakly as 6.7882 yuan per dollar on Tuesday.
Officials, however, have reiterated their expectations for a stable currency.
The currency’s weakness has revived memories of China’s surprise devaluation last August and another rapid depreciation early this year – falls that spread turmoil in global financial markets, as investors fretted about deepening economic woes as growth slipped to a quarter-century low.
As the dollar pushes higher against the yuan, which has a large weighting in the Fed’s exchange rate, it means the Fed is going to be more likely to rein in some of its more hawkish rhetoric, because of the strong dollar, negative risk feedback loop,” he added.
The dollar was close to a nine-month high against a basket of currencies, having already risen 3.6 per cent so far this month, as solid US manufacturing activity and comments from a Federal Reserve official cemented US rate hike bets. Strong US manufacturing data boosted US bond yields and supported the dollar,” said Shinichiro Kadota, senior strategist at Barclays Securities in Tokyo.
For Quick Trial – 8962000225 ✔
✆ – 0731-6626222 | Toll Free – 1800-3010-2007
Give a Missed Call for Free Trial – 09699997717