Yuan falls to 1-year low as parity cut
Print Edition
The Chinese yuan yesterday weakened for a fifth day to a one-year low after the central bank lowered the daily fixing due to a stronger US dollar.
The yuan touched 6.2334 per US dollar yesterday, the weakest since February last year, before closing at 6.2275, according to the China Foreign Exchange Trade System.
The People’s Bank of China lowered the currency’s central parity to a four-month low of 6.1460 from 6.1351 on Wednesday.
The currency has dropped 1.47 percent in the past five days.
Dariusz Kowalczyk, senior economist at Credit Agricole Corporate and Investment Bank, called the recent depreciation the “deepest correction in 20 years.”
He added that the currency will remain weak in the short term under policy pressure and weak exports.
“The PBOC has been behind the price action, guiding the market lower through a softer fixing policy,” Kowalczyk said.
“The growth slowdown has probably discouraged some exporters from converting export proceeds into yuan. In particular, February saw a massive, US$23 billion trade deficit which is the second largest in history.”
Economists expect the yuan to rebound in the second quarter.
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