Chinese parties have stood back from supporting the yuan for a third day. This triggered a pullback, in a sign it may not yet be ready to draw a line in the sand for the weakening currency. The People’s Bank of China set its daily reference rate for the managed currency in line with estimates after choosing a stronger-than-expected level on Monday and Tuesday. The offshore yuan dropped beyond 7.25 per dollar for the first time since November in afternoon trading in the absence of dollar sales by state-owned banks.
In effect, the yuan has fallen to a seven-month low, amid mounting evidence that China’s economic recovery will be slower than anticipated. Data released Wednesday showed that profits at the nation’s industrial firms continued to drop in May, reflecting the impact of soft demand and ongoing factory-gate deflation.
Source: bnnbloomberg.ca