[BEIJING] China's yuan strengthened, rebounding from an eight-month low, as the central bank boosted the currency's reference rate for the first time in four days.
The People's Bank of China set the daily fixing 0.03 per cent stronger at 6.1369 a dollar as the Bloomberg Dollar Spot Index fell for a second day. A report on Monday suggested US manufacturing grew in January at the slowest pace in a year. China's factory output contracted for the first time since September 2012, an official Purchasing Managers' Index indicated on Sunday.
"The yuan is rebounding along with other currencies in the region because of a weaker dollar overnight," said Daniel Chan, analyst at Brilliant & Bright Investment Consultancy Ltd in Hong Kong. "However, yuan weakness will persist as China's economic slowdown deepens." The yuan advanced 0.08 per cent, the most in a week, to 6.2546 per dollar as of 10:09 a.m. in Shanghai, according to prices from the China Foreign Exchange Trade System. It sank to 6.2606 on Monday, the weakest since May 2014 and a record 1.95 per cent weaker than the central bank's fixing. The gap was 1.88 per cent today and the maximum allowed divergence is 2 per cent.
In Hong Kong's offshore trading, the yuan gained 0.13 per cent to 6.2636 per dollar after advancing 0.19 per cent on Monday, data compiled by Bloomberg show. Twelve-month non- deliverable forwards climbed 0.13 per cent to 6.3810, trading 2 per cent weaker than the spot rate in Shanghai.