Yuan Drops Most in Two Weeks After PBOC Lowers Reference RateKyoungwha Kim
The yuan fell the most in more than two weeks as China’s central bank lowered the currency’s daily fixing by the most in a week.
The People’s Bank of China cut the reference rate, which restricts the onshore yuan’s moves to a maximum 1 percent on either side, by 0.06 percent to 6.1373 per dollar. The yuan has risen 2.3 percent this year and touched a 20-year high of 6.0802 per dollar in Shanghai last week.
“Chinese authorities would be quite interested in trying to stabilize the currency a bit,” said Cliff Tan, East Asian head of global markets research at Bank of Tokyo-Mitsubishi UFJ Ltd. in Hong Kong. “In both onshore and offshore markets, there’s been a lot of enthusiasm for the renminbi.”
The yuan in Shanghai declined 0.08 percent, the most since Oct. 11, to 6.0902 per dollar, China Foreign Exchange Trade System prices show. Non-deliverable yuan forwards due in 12 months fell 0.07 percent to 6.1554 in Hong Kong.
The forwards traded at a 1.1 percent discount to the onshore spot rate, compared with as much as 2.8 percent in June, data compiled by Bloomberg show. In Hong Kong’s offshore market, the yuan slipped 0.09 percent to 6.0810, according to data compiled by Bloomberg.
One-month implied volatility in the onshore yuan, a measure of expected moves in the exchange rate used to price options, was little changed at 1.3 percent.