Yuan forwards fell the most in four months as foreign funds pulled money from Chinese stocks on signs the government won’t be able to stem a market rout.
Overseas investors sold 10.3 billion yuan ($1.7 billion) more Shanghai stocks than they bought on Tuesday via a link with Hong Kong, following a record 13.4 billion yuan of net sales on Monday. A flurry of measures to stabilize the market, including a pledge by state-run financial firms to buy shares and a halt to initial public offerings, is failing to stop a drop that has erased more than $3.2 trillion in less than a month.
“The government’s failure to stabilize the stock market is making investors concerned that foreign funds will keep cashing out from China,” said Irene Cheung, a currency strategist at Australia & New Zealand Banking Group Ltd. in Singapore. “That is making the market less optimistic about the yuan.”
Twelve-month non-deliverable forwards fell 0.37 percent, the most since Feb. 27, to 6.2760 a dollar as of 4:43 p.m. in Hong Kong, data compiled by Bloomberg show. The contracts are down 0.49 percent this month.
The offshore yuan, which trades freely, declined 0.07 percent to 6.2197 in Hong Kong, data compiled by Bloomberg show. The onshore currency, which is constrained by a daily central bank fixing, was steady at 6.2100 in Shanghai, according to China Foreign Exchange Trade System prices.
The People’s Bank of China set the yuan’s reference rate at 6.1166 a dollar, little changed from Monday. The gap between the onshore spot rate and the fixing was 1.5 percent, within the 2 percent limit.
— With assistance by Tian Chen