China’s yuan headed for a fourth monthly drop, its longest losing streak in at least seven years, on concern a slowdown in Asia’s largest economy has deepened and as the central bank lowered the currency’s daily fixing.
Data this month showed China’s economy expanded 7.4 percent in the first three months of the year, the weakest pace in six quarters, while a preliminary private report showed manufacturing shrank for a fourth month. The People’s Bank of China cut the yuan’s reference rate by 0.1 percent in April and the currency is Asia’s worst performer in 2014. The monetary authority sees the spot rate’s discount to the fixing as evidence of the yuan’s two-way risk, according to ING Groep NV.
“The yuan’s decline isn’t over, and the economy isn’t going to improve much in the short term,” said Bruce Yam, a Hong Kong-based currency strategist at Sun Hung Kai Forex. “The PBOC is comfortable with the yuan’s current levels and even a further decline.”