BEIJING: China’s yuan fell against the dollar on Tuesday despite a slightly stronger midpoint set by the central bank as traders expect the currency to be under further downward pressure amid a struggling economy.
The People’s Bank of China set the midpoint rate CNY=SAEC at 6.3966 per dollar prior to market open, firmer than the previous fix of 6.3969.
The spot market CNY=CFXS opened at 6.3923 per dollar and was changing hands at 6.4005 near midday, 58 pips away from the previous close and 0.06 percent away from the midpoint.
The spot rate is currently allowed to trade with a range 2 percent above or below the official fixing on any given day.
The yuan posted its biggest weekly loss on record and touched four-year lows after the central bank’s surprise devaluation of its currency by nearly 2 percent last Tuesday.
“We consider the fair value of the yuan based on a trade-weighted basket at around 6.4-6.5 against the dollar and expect the direction of the currency unit fluctuation to be based on the health of the economy and the movement of other currencies globally,” Credit Suisse analysts said in a note on Monday.
