China's yuan eases, poll shows currency might weaken further

[SHANGHAI] The yuan eased against the US dollar on Friday as a Reuters poll showed the Chinese currency wass expected to weaken 2.5 per cent over the coming year as the US dollar rallies and the China's economy cools.

The People's Bank of China set the midpoint rate at 6.5793 per US dollar prior to market open, 0.16 per cent weaker than the previous fix 6.5688.

Spot yuan opened at 6.5880 per US dollar and was changing hands at 6.5844 at midday, easing 0.03 per cent from the previous close.

If the yuan closes around the midday level, it will soften 0.3 per cent this week after posting the second largest monthly fall on record of 1.6 per cent in May.

"The market is buying dollars in the morning as it anxiously awaits a US job report that could give a boost to the dollar," said a trader at a Chinese commercial bank in China.

"We expect the yuan to fall further but we are not so sure of when, given that the movement of the dollar is hard to predict."

Investors are piling up bets to profit from a fall in the Chinese currency with a variety of creative strategies, raising the risk of a fresh bout of yuan volatility that churned global markets just a few months ago.

The offshore yuan was trading 0.07 per cent softer than the onshore spot at 6.5893 per US dollar.

REUTERS