Yuan weaken to more than 4-year low
January 04 2016 11:42 PM
YUAN
A clerk counts Chinese yuan and US dollar banknotes at a branch of Bank of China in Taiyuan, Shanxi province. The Chinese currency softened against the dollar yesterday to its weakest level since April 2011.

Reuters/Shanghai

China’s onshore yuan softened against the dollar yesterday to its weakest level since April 2011 after the central bank set the guidance rate at a more than 4-1/2-year low.
The offshore yuan weakened to its lowest level since September 2011. Sentiment was further affected by yesterday’s Caixin/Markit China Manufacturing Purchasing Managers’ Index, which showed factory activity contracted for the 10th straight month in December, and at a sharper pace than in November. This weighed on hopes that the economy would start 2016 on a steadier footing. “The market was trading narrowly around 6.51 yuan,” said an onshore trader at a foreign bank in Shanghai in early trade.
“Dollar demand was strong, probably because some clients were in great need of dollars for travelling as they are still on holiday.”
The central bank has extended currency market trade to 11:30 pm local time (1530 GMT) as of yesterday, rather than ending at 4:30 pm, but the move will have no immediate impact on the yuan’s value, traders said. 
Still, the yuan’s closing rates will be the level at which it is quoted at 4:30 pm local time, at around 6.5190 yesterday. The spot market was changing hands at 6.5272 per dollar, 0.51% weaker than the previous close. It moved narrowly around 6.50 by midday and weakened nearly 200 pips to 6.5275 at 4:40 pm local time from an hour earlier. Prior to the market open, the People’s Bank of China set the yuan midpoint rate at 6.5032 per dollar – its lowest level since May 2011, 0.15% weaker than the previous fix of 6.4936.
The offshore yuan was trading 1.42% weaker than onshore spot at 6.6213 per dollar, edging near a five-year low touched last week. The onshore yuan was trading against the euro at 7.1369, 0.6% weaker than the previous close.


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