Yuan hits new 18-month low as lockdowns cloud economic outlook | Business and economy

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The weakening currency comes amid continued US dollar strength and concerns about slowing economic growth.

The Chinese yuan extended its losses to a fresh 18-month low in early trade on Monday, breaching a key threshold, as continued dollar strength and worries about a slowing economy added pressure on the currency.

Investors were also eagerly awaiting April trade data due later in the session to gauge the extent of disruption from COVID-19 lockdowns.

Ahead of the market open, the People’s Bank of China (PBOC) pegged the midpoint rate at 6.6899 per dollar, 567 pips or 0.85% lower than the previous patch of 6.6332, the weakest since November 3, 2020.

Like last week, official forecasts are firmer than market projections. Traders and analysts took this as a sign that authorities want to slow the currency’s slide.

Monday’s median fixation was 51 pips higher than Reuters’ estimate of 6.6950.

In the spot market, the onshore spot yuan fell below the psychologically important level of 6.7 per dollar to a low of 6.7110 before changing hands at 6.6936 at 0202 GMT, 285 pips lower. than the previous session close.

Its offshore counterpart was trading at 6.7337 to the dollar.

“The strength of the US dollar and China’s COVID-19 policy and associated implementations were and will likely continue to be the main themes affecting the CNY and other Asian currencies in the near term,” said Li Lin, chief executive. of Global Markets Research for Asia at MUFG Bank. .

Li cut his forecast for China’s full-year GDP growth to 4.3% from 5.2% previously, attributing the revision to China’s reaffirmation of its zero-COVID policy and maintaining strict virus containment measures taken by local governments.

Shanghai authorities have tightened citywide lockdown measures they imposed more than a month ago, extending until the end of May an ordeal the capital Beijing wants to avoid by transforming the testing of massage into an almost daily routine.

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