China’s central bank sets weaker yuan midpoint against US dollar for third day
The move comes after European Central Bank chief urged global leaders to discuss undervaluation of the Chinese currency
The People’s Bank of China set the yuan’s midpoint rate – which guides onshore market trading within a 2 per cent band on the up and down sides – at 6.8195 per US dollar, compared with 6.8171 on Tuesday.
A three-year high of 6.8088 was set on June 15, buoyed by the easing of trade tensions with the United States following US President Donald Trump’s visit to Beijing last month and China’s strong trade surplus.
On Wednesday morning, the onshore yuan opened about 0.05 per cent stronger. The offshore yuan, a gauge of overseas supply-demand conditions and foreign sentiment, traded weaker at 6.79 per US dollar.
Many financial institutions have been predicting yuan appreciation, with the latest forecast by Switzerland’s Bank J. Safra Sarasin eyeing a yuan-US dollar exchange rate of 6.50 by the end of the year.
“China’s resilience to the war in the Middle East has reassured Chinese policymakers that they are on the right track in prioritising national security in technology and energy,” said Mali Chivakul, emerging markets economist at the bank, in a note issued earlier this month. “A supply-driven inflation shock has also presented them an opportunity to reflate the economy by supporting domestic demand and wage growth.”