China’s yuan fell by the most in two months after the central bank lowered the currency’s fixing amid speculation authorities are protecting the nation’s exports against a weak yen.
The People’s Bank of China set the reference rate 0.04 percent weaker at 6.2816 per dollar today as trading resumed after last week’s closure for the Lunar New Year. Global finance chiefs at the Group of 20 nations meetings in Moscow signaled Japan has scope to keep stimulating its economy as long as policy makers cease publicly advocating a sliding yen, which has dropped 8.5 percent this year.
The yuan weakened 0.16 percent from Feb. 8 to close at 6.2427 per dollar in Shanghai, prices from the China Foreign Exchange Trade System show. That’s the biggest one-day decline since Dec. 14. The yuan is allowed to diverge a maximum 1 percent from the daily reference rate.
“Given there aren’t any critics of Japan at the G-20, the yen keeps weakening and that threatens Chinese exports,” said Bruce Yam, a foreign-exchange strategist at Sun Hung Kai Financial Ltd. in Hong Kong. “The yuan could fall to 6.26 or 6.27 per dollar as the central bank moves to counter the impact of a weak yen.”
In Hong Kong’s offshore market, the yuan dropped 0.24 percent, the most since Jan. 28, to 6.2335 per dollar, according to data compiled by Bloomberg. Twelve-month non-deliverable forwards fell 0.25 percent to 6.3285 per dollar, a 1.4 percent discount to the onshore spot rate.
One-month implied volatility in the yuan, a measure of expected moves in the exchange rate used to price options, rose six basis points, or 0.06 percentage point, to 1.32 percent, according to data compiled by Bloomberg.