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PUBLISHED: Jan 9, 2017 10:30am

Big drop in yuan valuation

FILE PHOTO: Benjamin Franklin U.S. 100 dollar banknotes and a Chinese 100 yuan banknote with the late Chinese Chairman Mao Zedong are seen in this January 21, 2016 picture illustration. REUTERS/Jason Lee/Illustration/File Photo       TPX IMAGES OF THE DAY

Source:
Reuters

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SHANGHAI, 9 Jan 2017:

China’s central bank set the official yuan midpoint at 6.9262 per US dollar prior to market opening today – 594 pips or 0.86% weaker compared with the previous fixing – booking the biggest daily percentage fall in more than six months.

The previous fix was 6.8668 per dollar on Friday.

China cannot let its yuan currency depreciate more than 25% against the dollar in 2017, a former advisor of China’s central bank said, according to state media.

China will continue to face pressures from capital outflows and currency depreciation in 2017, former member of the central bank’s Monetary Policy Committee Yu Yongding said, according to the Economic Information Daily.

The yuan depreciated 6.6% against the surging US dollar in 2016 – its biggest one-year loss since 1994, and is expected to weaken further this year if the dollar’s rally lasts.

Also,┬áChina’s central bank will inject 10 billion yuan into money markets today through seven-day reverse bond repurchase agreements, and an additional 100 billion yuan through 28-day reverse repos, traders said.

The People’s Bank of China drained a net 595 billion yuan from the market through open market operations last week.

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