China’s yuan suffered its longest losing streak in two years, falling for an eighth straight session early on Monday to its lowest level of 2018.
Analysts expect it to slip further, down to between 6.55 and 6.6 against the US dollar in the near future, in light of the China-US trade dispute showing no signs of easing and the People’s Bank of China signalling it will let the currency weaken more.
The offshore yuan on Monday down 0.4 per cent lower than Friday’s close, and down 2.6 per cent from its level of 6.3876 on June 13, the day before the PBOC’s decision not to follow the US Federal Reserve in raising the interest rate rise sparked its decline.
By about 7pm am on Monday evening, the yuan traded at 6.5538, the lowest since December 22 last year and has bypassed this year’s intraday low at 6.5449 seen on January 10. The yuan has now wiped out the whole of its 4 per cent gain against the US dollar earlier this year.
The PBOC on Monday set the yuan midpoint rate lower for a fourth day, down 1 per cent in that period. The yuan is not yet freely traded; the PBOC announces the mid-price fix every morning, around which the currency is allowed to trade up to 2 per cent either side.
The Chinese central bank on Sunday announced it would cut the amount of cash that some banks need to hold in reserve – known as the reserve requirement ratio – by 0.5 percentage points from July 5, unlocking 700 billion yuan (US$108 billion) of liquidity, as it seeks to control leverage and support...