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USD/CNY down below 6.1550 as Weakness Seen Overdone

China’s yuan advanced, extending its rebound from an 18-month low, on speculation declines that made the currency Asia’s worst performer this year were excessive.

The yuan rose 0.13 percent to 6.2375 per dollar at 10:23 a.m. in Shanghai, China Foreign Exchange Trading System prices show. The currency gained 0.22 percent yesterday, the most in a month, as local financial markets reopened after holidays on May 1 and 2. It reached 6.2676 on April 30, the weakest since October 2012 and has fallen 2.94 percent this year.

A technical indicator suggested the yuan’s recent weakness was overdone. The dollar’s relative strength index rose above 70 last week, a threshold to some traders that indicates a probable decline in the greenback.

Bloomberg [1]

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