After the central bank issued a verbal warning against currency speculation, China's onshore currency advanced for the first time in nine sessions.
The currency gained 0.3%, halting an eight-session slide around 3%. The People's Bank of China issued a strong statement on Wednesday, saying that speculators will lose money in the long term and key market participants need to protect the authority of fixing. It set the fix at a stronger than expected level for the 26th straight session.
The daily reference rate, Beijing's most widely used tool to guide yuan expectations, hasn't done much to stop the currency's weakness amid a surging dollar. The onshore currency has been trading close to the weak end of its 2% trading band against the dollar for most of the past week, showing that traders are sticking to their bearish bets on the yuan amid the strength of the dollar and the fact that the local economy suffers from Covid lockdowns and turmoil in the property sector.
The onshore yuan has fallen by 4% against the dollar this month and is on track for the worst annual loss since 1994. It fell to the lowest level since early 2008 and the offshore unit to a record low in data going back to 2010 on Wednesday.
A commentary from local newspaper Securities Times tries to calm market angst stemming from yuan weakness. The speed at which the yuan has depreciated against the dollar has been moderate compared to other currencies, and investors should view the moves with rationality, it said.
China Warns Yuan Speculators They Will Lose Money In The Long Term