China’s yuan fell to the weakest level in two weeks on speculation policy makers won’t tolerate currency appreciation as the economy slows.
The nation’s leading economic index dropped 0.1 percent to 160.1 in October, the Conference Board, a New York-based research organization, said today. The People’s Bank of China set the currency’s daily fixing 0.06 percent lower at 6.3396 per dollar, the weakest level since Nov. 30.
“The room for yuan appreciation is getting limited now as the latest data confirmed China’s economy is growing at a slower pace,” said Stella Lee, the Hong Kong-based president of Success Futures & Foreign Exchange Ltd. “Officials will prefer to protect exports and growth as inflation pressure is easing.”
The yuan dropped 0.08 percent to close at 6.3706 per dollar in Shanghai, according to the China Foreign Exchange Trade System. The currency touched 6.3713 earlier, the lowest level since Nov. 30 and at the weak end of the permitted range.
The central bank said today that it will continue to keep the yuan basically stable. Monetary policy will be preemptive, according to a statement released by the official Xinhua News Agency today after a conference of top Chinese leaders.
In Hong Kong’s offshore market the yuan fell 0.30 percent to 6.4025 per dollar. Twelve-month non-deliverable forwards declined 0.15 percent to 6.4415, a 1.1 percent discount to the onshore spot rate.