China’s Yuan Weakens on Speculation Importers Buying Greenback

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The yuan fell on speculation importers are buying dollars to take advantage of the Chinese currency’s biggest advance in almost eight months yesterday.

The yuan slid 0.25 percent to 6.2129 in Shanghai, China Foreign Exchange Trade System prices show. It jumped 0.3 percent yesterday, the biggest gain since May 6, and has risen 0.12 percent this week. The currency weakened 2.6 percent against the greenback this year, set for the first annual loss since 2009.

“People overall still feel that importers are under-hedged,” said Ju Wang, a senior currency strategist at HSBC Holdings Plc in Hong Kong. “The yuan’s gain yesterday provided an opportunity for some of these importers to buy dollars.”

The People’s Bank of China raised the yuan’s reference rate by 0.04 percent to 6.1186 per dollar. The onshore spot rate traded at a 1.5 percent discount to the daily fixing, within the 2 percent limit. The Bloomberg Dollar Spot Index, which tracks the currency against 10 peers, has fallen 0.3 percent from a five-year high reached on Dec. 23.

The offshore yuan declined 0.11 percent to 6.2140 a dollar in Hong Kong, data compiled by Bloomberg show. Twelve-month non-deliverable forwards climbed 0.06 percent to 6.3524, 2.2 percent weaker than the spot rate in Shanghai.

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