Yuan Drops From Two-Week High as Investors Await British Result

The yuan declined from a two-week high as the U.K.’s referendum on membership of the European Union got under way.

The Chinese currency fell 0.07 percent to 6.5796 per dollar at 5:07 p.m. in Shanghai, according to National Interbank Funding Center prices. Losses came even after the People’s Bank of China strengthened the daily reference rate against the greenback by 0.4 percent on Thursday, the most in two weeks.

“Given the unpredictable and likely large swings in basket currencies, the dollar would stand out as the best anchor for the yuan,” said Harrison Hu, chief greater China economist at Royal Bank of Scotland Plc.

The Chinese currency has fallen against all but one of 30 major global peers in the past month, including losses of more than 6 percent versus the South African rand and the New Zealand dollar, while a Bloomberg replica of CFETS RMB Index is near the lowest level since 2014. The economy may not have bottomed out despite a rebound in some indicators in the first quarter, the China Securities Journal reported this week, citing People’s Bank of China former adviser Li Daokui.

Investors have been glued to the U.K.’s debate on EU membership in recent weeks as governments and central banks around the world warned that a vote for so-called Brexit could hurt global economic growth and destabilize financial markets. A gauge of expected volatility in U.S. stocks jumped to its highest level since February ahead of the referendum.

The yuan traded in Hong Kong’s free market declined 0.17 percent to 6.5932, data compiled by Bloomberg show.

Premier Li Keqiang told central bank officials on Monday that the currency settings should remain stable and transparent, according to a person who was an official present at the meeting.

— With assistance by Helen Sun

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