The yuan declined to its weakest level in almost a month on speculation policy makers will slow appreciation as growth in Asia’s biggest economy decelerates.
Premier Wen Jiabao set an economic growth target of 7.5 percent for this year, the least since 2004, in a speech at the National People’s Congress in Beijing today. He also set an inflation target of 4 percent, unchanged from last year’s. The People’s Bank of China weakened the currency’s daily fixing by the most since November 2010, setting it 0.22 percent lower at 6.3121 per dollar.
“There isn’t an urge for China to strengthen the yuan as the export outlook remains uncertain,” said Tommy Ong, the Hong Kong-based senior vice president of treasury and markets at DBS Bank (Hong Kong) Ltd.
The yuan dropped 0.13 percent to 6.3067 per dollar in Shanghai, the weakest closing level since Feb. 6, according to the China Foreign Exchange Trade System. The currency is allowed to trade 0.5 percent either side of the daily fixing.
In Hong Kong’s offshore market, the yuan slipped 0.10 percent to 6.3028. Twelve-month non-deliverable forwards fell 0.14 percent to 6.2910, a 0.2 percent premium to the onshore spot rate, according to data compiled by Bloomberg.
China will keep the yuan’s exchange rate stable, Wen said. The currency will appreciate 3 percent this year, compared with 4.7 percent in 2011, Ong forecast.