China’s yuan was little changed on concern a slowdown in the U.S. economic recovery will prompt the central bank to decelerate appreciation to protect exports.
The central bank set the reference rate at 6.8007 per dollar, the weakest in more than a week, after a U.S. government report yesterday showed sales of existing houses had a record plunge in July. The yuan has weakened 0.4 percent this month, following a 0.8 percent gain since a two-year dollar peg was dropped on June 19.
“The slowdown in foreign economies increases uncertainties in China’s export recovery,” said Liu Dongliang, a Shenzhen- based analyst at China Merchants Bank Co., the country’s sixth- largest lender by market value. He estimated the yuan will rise as much as 2 percent against the dollar by the end of this year.
The yuan traded at 6.7989 per dollar as of 10:16 a.m. in Shanghai, from 6.7972 yesterday, according to the China Foreign Exchange Trade System. Twelve-month non-deliverable forwards were little changed at 6.6905, reflecting bets the currency will advance 1.6 percent, according to data compiled by Bloomberg.
The National Association of Realtors reported yesterday that sales of existing homes dropped 27 percent in July after a revised 7.1 percent reduction in the previous month. The median forecast of 74 economists in a Bloomberg News survey was for a 13.4 percent drop. The U.S. is China’s second-largest export market.