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Forex: Yuan weakens against US dollar

by Paul

The Chinese Yuan finished the onshore trading down Friday against the US dollar. Official data showed that the Yuan stood at 6.9005 by 4:30 pm Beijing time, a figure 206 basis points weaker than the previous close.

Positive data on consumption and producer prices did not offer much help for the forex rate. Traders say the demand for foreign funds remained strong. The European Central Bank’s decision to shrink stimulus purchases dented the euro and pushed the dollar higher.

Economists say the sharp drop in the Yuan would result in capital outflows, hurting the Chinese economy. According to analysts, the Yuan’s strength will be based on the country’s economic strength over the long run. Experts are expecting a growth rate above 6.5 per cent for the whole year.

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