China's yuan suddenly retreats the most in three weeks

[HONG KONG] China's yuan suddenly dropped on Monday morning to end a long spell of subdued trading.

The offshore yuan fell 0.21 per cent to 6.8948 per US dollar as of 11.45am in Hong Kong. The yuan traded onshore was down 0.19 per cent as the worst performer among 31 major currencies.

Yuan liquidity in Hong Kong was loose, making it cheap to short the currency. The overnight Hibor has tumbled 134 basis points in the past five sessions, the longest slump since December.

Tiny moves in the yuan had turned it into the world's dullest currency lately. Investors had been waiting to see what the next development in US-China trade dispute will be. Chinese and American negotiators are set to meet again this week in Shanghai. They're also watching to see how the People's Bank of China will respond if the Federal Reserve cuts interest rates later this week, as expected.

BLOOMBERG