China's Yuan Just Sunk to an 8-Year Low Against the Dollar

TOKYO, Nov 15 The dollar is closing in on a test of its highest level in nearly 14 years as bond yields soared after Donald Trump's election to president, bringing buyers back to the US currency. The slide came after the government's decision to reset the exchange price as a possible defense against U.S. president Donald Trump's threat to declare China as a currency manipulator.

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 per cent from Monday's fixing, according to data from the Foreign Exchange Trade System.

Although he predicts further weakness against the U.S. dollar, whether that permeates to declines against other major currency pairs appears more uncertain, with the yuan broadly stable on a trade-weighed basis over recent months.

In China's spot foreign exchange market, the central bank strictly controls trading of the yuan.

The US Department of the Treasury last month cleared China of keeping the yuan cheap for trade advantages, saying the currency could have fallen more had Beijing not acted. The threat, if carried out, would push up the value of the yuan making it hard for Chinese exporters to compete, experts say.

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 dollar index vaulted above its January peak to hit 100.22 on Tuesday, its highest level since early December past year. It is within reach of its December 2015 peak of 100.51, and a rise above that would take it to its highest level since 2003.

"Hence, the decline in the CNY has kept pace with the depreciation seen in the other currencies in the RMB basket", he adds.

CICC still expects the yuan to ease to around 6.98 by the end of 2017.

The offshore yuan fell to its weakest against the dollar since before the launch of its offshore market in 2010. Only when viewed against the USA dollar does the yuan appear weak.

Related News:

Most liked

Most Commented