HONG KONG — China’s yuan weakened on
Monday as the US dollar firmed and after data showed a sharp
decline in China’s industrial profits for January and February.
The yuan dropped to its lowest point since last Wednesday in
early morning trade. The decline was in line with other Asian
currencies after the US dollar extended gains made on comments
by US regulators that the banking sector remained “sound and
Profits for China’s industrial firms shrank 22.9% in the
first two months this year from a year ago, as the factory
sector struggles to claw its way out of the slump caused by
That followed a 4% drop in industrial profits for 2022 and
suggests an uneven path to recovery for the economy. Retail
sales for January-February showed stronger growth momentum.
“While the industrial profits data are quite negative, the
yuan was more dragged down by the dollar’s strength,” said Alvin
Tan, head of Asia currency strategy at RBC Capital Markets.
“Historically, the market reacts more to economic data such
as the purchasing managers’ index” which is due out Friday, he
After opening at 6.8730 per dollar, the spot yuan was
Changing hands at 6.8784 at midday, 105 pips weaker than the
previous late session close and 0.10% away from the midpoint.
The People’s Bank of China set the midpoint rate
at 6.8714 per US dollar prior to the market open, weaker than
the previous fix of 6.8374.
The spot rate is currently allowed to trade with a range of 2%
above or below the official fixing on any given day.
The dollar index, which measures the currency against
six rivals, was up 0.01% at 103.000, having gained 0.5% on
Investors will be closely watching US gross domestic
product data for the last quarter of 2022 that is due out on
Thursday, while core PCE CPI, the Fed-favored inflation gauge,
is slated for Friday.
Financial stocks experienced sharp moves throughout last
week after the collapse of two US lenders and last weekend’s
Swiss-government-orchestrated takeover of troubled Credit Suisse
by rival UBS.
“Any sign of further credit stress in the banking sector
could quickly eclipse any signs of economic strength in the US
and continue to contribute to rate cut expectations this year,”
Maybank analysts said in a research note on Monday.
Offshore yuan was trading 0.02% weaker than
onshore spot at 6.8799 per dollar.
The one-year forward value for offshore yuan
traded at 6.729 per dollar, indicating appreciation of roughly
2.24% within 12 months.
The yuan market at 2:51AM GMT:
Item Current Previous Change
Spot change YTD
Spot change since 2005
OFFSHORE CNH MARKET
Instrument Current Difference
Offshore spot yuan
*Premium for offshore spot over onshore
**Figure reflects difference from PBOC’s official midpoint,
Since non-deliverable forwards are settled against the midpoint.
(Reporting by Georgina Lee; Editing by Edwina Gibbs)
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