BEIJING: Chinese currency yuan fell to a three-month low as the central bank weakened the currency’s reference rate amid a dollar advance and on concern China will allow a decline to help its economy.
The yuan is massively overvalued and needs to drop, David Tepper, the billionaire owner of Appaloosa Management, said at the Robin Hood Investor’s Conference last week. His comments follow similar views from hedge fund managers including Crispin Odey, founder of the $12 billion Odey Asset Management, who predicts China will devalue by at least 30 percent. A Bloomberg dollar gauge rallied, bolstered by comments from Federal Reserve officials about the prospect of a December interest-rate increase.
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The yuan declined 0.07 per cent to close at 6.3896 a dollar in Shanghai, China Foreign Exchange Trade System prices show. It fell to 6.3955 earlier, the lowest since August 28. In Hong Kong’s offshore market, the currency slipped as much as 0.21 per cent to a two-month low of 6.4352. The central bank earlier cut the onshore yuan’s daily fixing, which limits the yuan’s moves to two per cent on either side, by 0.14 per cent to 6.3867, the weakest since August 31.
“The weaker fixing and the prospect of a higher US interest rate are weighing on the yuan today,” said Kenix Lai, a foreign-exchange analyst at Bank of East Asia in Hong Kong. “Investors are still quite bearish on the yuan given the weak economic fundamentals.”
