China's yuan falls to record low against dollar

103
2
China's yuan falls to record low against dollar

The Shanghai yuan fell against a rising dollar in early deals on Wednesday, with its offshore trades dropping to a record low, pressured by expectations for more Federal Reserve hikes.

China's offshore currency fell as far as 7.2349, the lowest level since such data became available in 2011. It was trading at 7.2286 per dollar at the time of 0241 GMT.

Its onshore counterpart fell to a lowest since the 2008 financial crisis, falling to a low of 7.2302 per dollar in early trade. It traded at 7.2240 around 0241 GMT, compared to the previous late night close of 7.18.

The yuan can't escape, said a trader at a foreign bank that all non-dollar currencies crashed in early trades.

On Wednesday, corporate dollar buying was very strong, adding more pressure on the yuan, according to several currency traders.

The People's Bank of China PBOC set the midpoint rate at 7.1107 per dollar, 385 pips or 0.54 per cent less than the previous fix of 7.0722 prior to market opening.

The decline comes even as China's central bank announced new steps to slow the pace of the yuan's recent fall by making it more expensive to bet against the currency.

The PBOC cut the amount of foreign exchange reserves that financial institutions must hold in order to slow the yuan's depreciation earlier this month.

Efforts by authorities to stem yuan weakness were having a limited impact, said a second trader at a Chinese bank.

A source told Reuters late on Tuesday that Chinese monetary authorities are asking local banks to revive a yuan fixing tool it abandoned two years ago, as they seek to steer and defend the rapidly weakening currency.

The dollar's strength comes as the U.S. central bank hiked interest rates by three-quarters of a percentage point for a third straight week last week, signalling that borrowing costs would keep rising this year.