China’s yuan dropped to a one-week low as the central bank weakened its daily fixing to the lowest level since November to help exporters.
The People’s Bank of China reduced the reference rate by 0.02 percent to 6.3495 per dollar, the least since Nov. 29, after the Dollar Index climbed 0.2 percent yesterday. Premier Wen Jiabao said there’s “growing room for monetary-policy operations,” during a two-day visit to the eastern province of Zhejiang, according to a report on state television.
“China will keep the yuan weaker to alleviate pressure on exporters,” said Daniel Chan, executive vice president at Glory Sky Global Markets Ltd. in Hong Kong. “There’s no surprise in what Wen said. More aggressive easing is just a matter of timing and investors are waiting for genuine actions.”
The yuan declined 0.05 percent to close at 6.3658 per dollar in Shanghai, according to the China Foreign Exchange Trade System. The currency traded at a 0.26 percent discount to the daily fixing, well within the 1 percent limit. One-month implied volatility, a measure of exchange-rate swings used to price options, decreased six basis points, or 0.06 percentage point, to 1.25 percent.
China has “the conditions and capabilities, and will be sure to fulfill this year’s economic and social development target,” Wen said while in Zhejiang, the official Xinhua News Agency reported. The nation is targeting growth of 7.5 percent in 2012, he said in March.
Foreign direct investment in the world’s second-largest economy dropped 8.7 percent in July from a year earlier, the Ministry of Commerce said today. That compares with the 2.5 percent decline estimated by economists surveyed by Bloomberg.
In Hong Kong’s offshore market, the yuan was little changed at 6.3713 per dollar. Twelve-month non-deliverable forwards fell 0.09 percent to 6.4460, at 1.2 percent discount to the onshore rate, data compiled by Bloomberg showed.
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