- PBOC raised daily reference rate to strongest since Dec. 15
- Yuan's drop against peers to help boost exports: Goldman Sachs
The yuan fell for the first time in four days, shrugging off the strongest daily reference rate in four months by the Chinese central bank.
The yuan weakened 0.15 percent to 6.4680 a dollar as of 6:02 p.m. in Shanghai, according to China Foreign Exchange Trade System prices, after climbing to a one-week high on Tuesday. The People’s Bank of China raised the yuan’s fixing to the strongest level since Dec. 15. A Bloomberg replica of the CFETS RMB Index, which measures the currency against 13 exchange rates, dropped to the lowest level since the official basket was introduced in December.
The yuan’s decline against peers will help boost the nation’s exports in the second quarter, Goldman Sachs Group Inc. wrote in a note this week, adding that authorities are expected to keep a “loosening bias” even as policy support for domestic investment was projected to become “less aggressive.” The CFETS index has dropped 3.5 percent this year, while the yuan has gained 0.4 percent against the dollar during the same period.
Chinese policy makers’ goal of keeping the yuan “basically stable” against a basket of currencies looks increasingly insincere for anyone tracking the trade-weighted exchange rate, Mark Williams, chief China economist at Capital Economics, wrote in a note dated April 19.
The offshore yuan retreated 0.05 percent to 6.4720 a dollar in Hong Kong, data compiled by Bloomberg show. The PBOC strengthened its fixing by 0.19 percent to 6.4579. A Bloomberg gauge of the dollar’s strength was little changed, after weaker-than-expected U.S. new-home construction data in March sent the greenback to its weakest level since June on Tuesday.
— With assistance by Tian Chen