Yuan fix versus dollar falls to 6-year low
THE central parity rate of the yuan weakened to a six-year low against the US dollar yesterday, but the People’s Bank of China, the central bank, voiced confidence in the currency’s long-term stability.
The central parity rate weakened 0.34 percent, or 230 basis points, to 6.7008 against the dollar, according to the China Foreign Exchange Trade System, the lowest level since September 2010.
Onshore yuan in Shanghai closed the day 0.42 percent lower at 6.7028 to the greenback at 4:30pm.
The offshore yuan exchange rate in Hong Kong fell by a similar rate during the National Day holiday. The Hong Kong rate was quoted at 6.7086 yesterday, its lowest level in six years.
The dollar strengthened due to a sharp depreciation of the pound and increased expectations of a US interest rate hike.
Despite the decline against the dollar, the yuan strengthened against a basket of currencies, according to a commentary on the CFETS website, which is run by the PBOC.
“There is no basis for the yuan to depreciate in the long term,” the commentary said, citing China’s long-term current account surplus, abundant foreign exchange reserves, sound fiscal conditions and a healthy financial system.
It is normal for the yuan to fluctuate against the dollar and it will continue to do so, said the commentary.
The recent inclusion in the IMF Special Drawing Rights basket will help the yuan remain basically stable against other currencies “at a reasonable and balanced level” by increasing overseas holding of yuan assets, according to the commentary.
The “Financial News,” administered by the PBOC, published an article yesterday predicting overall stability of the yuan despite short-term pressure from a strong dollar.
SDR inclusion is expected to increase the yuan’s share in global forex trading to around 15 percent by 2020 from the current level of 5 percent, and a growing trade surplus will help forex reserves and keep the currency largely stable.
China’s forex reserves shrank to US$3.17 trillion at the end of September, the third consecutive monthly decline. Han Huishi, a China Construction Bank analyst, blamed the drop on short-term factors, and noted that the country might have sold some forex reserves to stabilize the yuan ahead of the SDR inclusion.
Purchases of foreign currency by Chinese residents ahead of the weeklong holiday that ended on Friday was another reason for the fall in reserves, Han said.
In September, the yuan was relatively steady against a basket of currencies. The yuan exchange rate composite index, which measures the yuan’s strength relative to a basket of currencies including the US dollar, euro and yen, weakened by 0.28 percent month on month to 94.07, according to CFETS data.
During the same period, the index that measures the yuan against the Bank for International Settlements currency basket weakened by 0.31 percent, while that against the SDR basket weakened by only 0.06 percent.
- About Us
- |
- Terms of Use
- |
- RSS
- |
- Privacy Policy
- |
- Contact Us
- |
- Shanghai Call Center: 962288
- |
- Tip-off hotline: 52920043
- 沪ICP证:沪ICP备05050403号-1
- |
- 互联网新闻信息服务许可证:31120180004
- |
- 网络视听许可证:0909346
- |
- 广播电视节目制作许可证:沪字第354号
- |
- 增值电信业务经营许可证:沪B2-20120012
Copyright © 1999- Shanghai Daily. All rights reserved.Preferably viewed with Internet Explorer 8 or newer browsers.