Offshore yuan slips as China sets weakest fixing since 2008

THE offshore yuan declined, edging closer to its weakest on record, as China signalled a looser grip on the currency by weakening the fixing.

The currency dropped as much as 0.3 per cent to 7.3567 per dollar after the People’s Bank of China (PBOC) set its fixing at a near 15-year-low. The move came after the yuan slid in both onshore and overseas trading on Monday (Oct 31), with the Federal Reserve expected to deliver yet another super-sized rate hike this week.

“The authorities are allowing the fix to gradually weaken, indicating an increasing tolerance to letting spot adjust further to the downside,” Khoon Goh, head of Asia research at Australia & New Zealand Banking Group. “At this stage, it looks like the PBOC is focused on ensuring the adjustment is orderly.”

Still, Tuesday’s fixing - which limits onshore yuan’s moves by 2 per cent on either side - was stronger than the average forecast of 7.2777 in a Bloomberg survey. The rate has been higher-than-expected for 44 straight days. BLOOMBERG