Yuan weakens after Mnuchin says he won’t label China a currency manipulator for now
So far this year, the onshore yuan has rebounded 1 pc against the US dollar
The Chinese yuan weakened against the US dollar on Friday morning, after new US Treasury Secretary Steven Mnuchin said he won’t label China a currency manipulator for now, backing away from US President Donald Trump’s tough rhetoric on China’s yuan valuation policy.
The spot yuan, which trades in Shanghai, was changing hands at 6.8721 at 5.50pm, down 0.09 per cent from 6.8661 late Thursday.
The offshore yuan also moved lower in Hong Kong, trading at 6.8515 compared with 6.8494 in the previous session.
After an annual drop of nearly 7 per cent last year, the onshore yuan has rebounded 1 per cent so far this year against the US dollar.
The offshore yuan has also strengthened 2 per cent during the same period.
Earlier on Friday, the People’s Bank of China raised the yuan’s guidance rate by 40 basis points to 6.8655 per US dollar. Traders are allowed to buy or sell the yuan within 2 per cent of the currency’s daily reference rate.
This could ease some of the trade war concerns for the Asian region which has been one of the main factor weighing on investor’s mind since the US elections
“If [US] Treasury Secretary Steven Mnuchin’s address had been in any manner positive for emerging markets, it could be the fact that he has abstained from passing any hard stance upon the trade partners of the US,” said Jingyi Pan, a strategist for IG Group.
“This could ease some of the trade war concerns for the Asian region which has been one of the main factor weighing on investor’s mind since the US elections,” she added.
Mnuchin said Thursday in an interview with CNBC that the Treasury is in a process of looking at “currency manipulation across the board” and won’t make any judgement “until we continue that process”.
Mnuchin’s remarks were a step back from Trump’s promise during his election campaign in October that he would name China a manipulator on his first day of presidency, although Trump has already softening his tone a little in January by saying he would “talk to them (China) first”.
Still, Pan warned investors not to let down their guard, as “this has been an administration we are used to expecting surprises”.
The ICE US Dollar Index, which measures the buck’s strength against six other currencies, slipped to 100.9 from 101.05 late Thursday.
Against the Japanese yen, the US dollar bought ¥112.48 at 5.50pm, compared with ¥112.61 in the previous session.
The euro was at US$1.0594 from US$1.0582, and sterling was at US$1.254 from US$1.2556.
