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Yuan drops against basket amid growth concern, US dollar weakness
[HONG KONG] The yuan fell against a basket of currencies for a third day, prompting speculation the central bank is returning to a strategy of stability against a declining dollar and weakness against the exchange rates of its trading partners.
The greenback retreated last week as expectations for a rate hike in the US this year all but vanished after Britain voted to leave the European Union. Data released in the past week show a slowdown in manufacturing and industrial profits, while figures due Wednesday are forecast to indicate a drop in the nation's foreign-exchange reserves.
"The market is still concerned about the Chinese economy," said Gao Qi, a foreign-exchange strategist at Scotiabank in Singapore.
"When most currencies are rising against the US dollar, usually the yuan will appreciate less, so the yuan will fall versus the basket."
A Bloomberg replica of a 13-currency index tracked by the People's Bank of China dropped 0.2 per cent to 94.71, the lowest since at least October 2014.
The onshore yuan was little changed at 6.6633 per US dollar as of 10:17 am in Shanghai, while the offshore yuan rose 0.05 per cent to 6.6746 in Hong Kong. The PBOC strengthened the yuan's daily fixing by 0.04 per cent to 6.6472.