PBOC Weakens Yuan Daily Fixing After Europe Meeting Disappoints
The People’s Bank of China lowered the yuan’s daily fixing for a second day following a European Union summit that didn’t address the question of further aid for debt-stricken Spain.
The PBOC set the reference rate 0.03 percent weaker at 6.3071 per dollar, after strengthening it on each of the six days through Oct. 18. The yuan, which can trade as much as 1 percent on either side of the fixing, closed little changed at 6.2547 in Shanghai, according to the China Foreign Exchange Trade System. The Chinese currency has advanced 2.3 percent since reaching this year’s low of 6.3967 on July 25.
“It’s too early to tell from the weakening in the fixing in the past two days if the central bank is slowing the pace of appreciation,” said Liu Dongliang, a Shenzhen-based senior analyst at China Merchants Bank Co., the nation’s sixth-biggest lender.
Leaders at the Oct. 18-19 meeting didn’t discuss more assistance for Spain, French President Francois Hollande told reporters Oct. 19. Regional stocks fell today after the Standard & Poor’s 500 Index dropped by the most in four months on Oct. 19.
“No conclusion reached at the summit disappointed the market,” Liu said.
One-month implied volatility in the yuan, a measure of exchange-rate swings used to price options, decreased five basis points, or 0.05 percentage point, to 1.50 percent.
In Hong Kong’s offshore market, the currency strengthened 0.02 percent to 6.2543 per dollar, according to data compiled by Bloomberg. Twelve-month non-deliverable forwards rose 0.02 percent to 6.3665. The contracts traded at a 1.8 percent discount to the onshore rate.