China’s Yuan weakened on Monday as the dollar strengthened again, but traders were hesitant to buy greenbacks amid concern the central bank may step in try to halt the Chinese currency’s slide.
The global dollar index, a gauge of the dollar’s strength, rose, causing China’s central bank to weaken the official guidance rate for the Yuan to a fresh six-year low.
Supported by upbeat US data last week, the dollar index stood at 98.12 after touching 98.158, its highest since March 10.
Spot Yuan traded in a thin range on Monday morning as the market tested how far the central bank would let the Chinese currency soften against the greenback, traders said.
A trader at a foreign bank in Shanghai said, “The market was not in such a panic this morning, but willingness to both buy and sell dollars by companies was tepid. Some investors sold their overnight long positions in dollars in early trade”.
