The Chinese yuan extended a small decline on Friday morning after the country’s central bank announced a weaker fixing. Analysts said the currency will be stable for months ahead.
The onshore yuan in Shanghai retreated to 6.4821 against the US dollar as of 11.00 am, down 0.02 per cent or 11 basis points from a day earlier.
In Hong Kong the offshore yuan at one point hit a week’s low of 6.4915 to the dollar and stood at 6.4851 against the greenback as of 11.02 am. That was 0.02 per cent or 16 basis points stronger than the previous trading day.
The People’s Bank of China on Friday set the mid point at 6.4898 to the dollar, which is 95 basis points or 0.14 per cent weaker from Thursday, in line with a firmer dollar overnight.
The onshore yuan has dipped 0.14 per cent so far this week to extend a small decline over the past fortnight. The offshore yuan retreated 0.04 per cent this week.
The onshore yuan has lost 0.53 per cent so far in April, following a gain of 1.59 per cent in March as the dollar weakened because of the Federal Reserve’s dovish stance on rates. The Fed is the US central bank and will hold a meeting next week to discuss the interest rate policy for May.
Wang Chunying, spokeswoman of the State Administration of Foreign Exchange, said on Thursday that China would be able to cope with any impact from Fed rate increases, should it choose to do so.
The Chinese authority is likely to keep the yuan stable ahead of the G20 summit in Hangzhou in September, Judy Chang, CIFM Asset Management chief investment officer said.
The G20 is an economic meeting of countries that includes Australia, Brazil, Canada, China, the European Union and others.
“With the Fed unlikely to rock the boat [with an interest rate hike] anytime soon I would expect the yuan to continue trading very stable to its linked basket of currencies through the better part of 2016,” said Stephen Innes, senior trader at OANDA Asia Pacific.
Friday saw the Japanese yen strengthen to 109.36 to the dollar, up 0.07 per cent. The euro rose 0.11 per cent to US$1.1298 following a fall overnight after European Central Bank president Mario Draghi maintained his dovish stance at a news conference yesterday.
original source: http://www.scmp.com/business/markets/article/1937719/chinese-yuan-extends-small-loss-friday