Moments ago the People’s Bank of China (PBOC) announced its Tuesday fixing level for the yuan – and it’s weaker again.
The USD/CNY rate was set at 6.5169, higher than Monday’s fix of 6.5032 but below yesterday’s closing level of 6.5338. Trade in the currency will resume shortly at 12.30pm AEDT.
A higher figure indicates that the US dollar has strengthened against the Chinese currency.
Unlike the reaction seen yesterday, markets have taken the weakening in their stride. Risk assets have moved marginally higher on the news, indicating relief that the fix was not as high as the previous closing level.
Ever since the renminbi was first admitted to the IMF’s special drawing rights basket (SDR) in early December last year, it has been nothing but one way traffic for the currency. Day-after-day it has been weakening, heightening fears that capital continues to flee the country in search of greater returns, and safety, abroad.
The USD/CNY chart below tells the story.
Beyond the fix, the performance of Chinese stocks – having closed early yesterday after falling by the maximum 7% allowed by market regulators – is also likely to be influential today.
Trade in Chinese markets will resume at 12.30pm AEDT.