Published By : 22 Sep 2015 | Published By : QYRESEARCH
As China’s central bank cut down on its daily reference rate before due of manufacturing data was released, the yuan dropped the most in almost two weeks in China. The yuan was cut by 0.07% to the lowest level since September 10. The factory output is reducing in this month for the 7th time in a row, based on a market leading estimate survey.
The weak data pushes the case for China to cover up for the interest cuts of 2014. The U.S. monetary policy is aimed in the other direction as the officials of the bank expect on borrowing costs to be raised in this current year.
The Fed members as well as a weaker fixing have pushed the yuan lower today. China’s economy is still sloping and the fundamentals are extremely weak. This factor will keep pressuring the currency in the medium term.
Moreover, the onshore yuan in Shanghai decreased by 2%, and fell 0.11% to close at 6.3760 per dollar. This has been the biggest drop since September 9. The trade offshore yuan was changed at 6.40632 at 4.39 p.m in Hong Kong.
China’s President said attracting foreign investment is one of the long-term policy plans that aren’t likely to change in the country. The reformation of the yuan’s exchange-rate regime is expected to continue in a positive direction. There is no basis of sustained depreciation during this phase.
The PBOC plans to sell yuan debt in London in the coming years. This is a move likely to promote the global use of the currency and support China’s bid to add yuan in the International Monetary Fund’s reserve-currency program.
As China is making efforts to internationalize the currency, yuan is expected to remain steady in the near future.