Yuan Heads for Second Weekly Decline as Fixing Cut Amid Slowdown China’s yuan headed for its second weekly decline after the central bank guided the currency’s reference rate lower amid slowing economic growth. The People’s Bank of China cut the fixing on four of five days this week, lowering it to 6.1751 per dollar today, 0.2 percent less than on July 12. The International Monetary Fund said July 17 there is an increasing risk that China’s 2013 growth will fall short of the fund’s 7.75 percent forecast. China should widen the yuan’s trading band and accelerate capital-account convertibility, according to a front-page commentary in the China Securities Journal. The yuan fell 0.05 percent this week to 6.1406 per dollar as of 10:03 a.m. in Shanghai, China Foreign Exchange Trade System prices show. The currency, which was little changed today, has strengthened 1.5 percent this year, the only gainer among the 11 most-traded Asian exchange rates. It is allowed to trade 1 percent on either side of the daily fixing. “Frustration with the yuan’s appreciation policy is causing them to consider alternatives,” Tim Condon, head of Asian research at ING Groep NV in Singapore, wrote in a report today, referring to the PBOC. “The authorities are committed to moving to a more market-based exchange rate, including a further widening of the exchange-rate band,” he wrote, adding that ING was reviewing its yuan forecast for a downward revision. Asia’s largest economy expanded 7.5 percent in the second quarter from a year earlier, official data showed this week, slowing from a 7.7 percent gain in the preceding three months and 7.9 percent in the final quarter of 2012. In Hong Kong’s offshore market, the yuan was little changed this week and today at 6.1405 per dollar, data compiled by Bloomberg show. Twelve-month non-deliverable forwards advanced 0.13 percent this week and were steady today at 6.2806, a 2.2 percent discount to the onshore spot rate. One-month implied volatility in the onshore yuan, a measure of expected moves in the exchange rate used to price options, dropped 15 basis points this week and was unchanged today at 1.55 percent.
Posted on: Fri, 19 Jul 2013 04:25:35 +0000
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