The Chinese yuan continues to unravel, hitting fresh year-to-date lows on Friday.
The latest bout of weakness follows the USD/CNY daily midpoint fixing from the People’s Bank of China (PBoC).
The PBOC set the rate at 6.6166 today, well above the 6.5960 level of Thursday. A higher number implies a weaker yuan.
It was the eighth consecutive day that the yuan was fixed weaker against the greenback.
In response to the news, offshore traded yuan, or CNH, has fallen sharply with the USD/CNH moving back above the 6.65 level for the first time since November last year.
It currently trades at 6.6469.
As seen in the daily chart below, it’s now quickly approaching an area of technical resistance.
The continued yuan weakness has also weighed on commodity-linked currencies such as the Australian and New Zealand dollars which are both down around 0.2% for the session.
“The meltdown in CNY and Chinese equities is keeping emerging markets under pressure,” says Rodrigo Catril, senior FX Strategist at the National Australia Bank.
“We think USD/CNY and Chinese equities deserve close attention at the moment. Further declines will undoubtedly increase the risk of contagion.”