The Chinese yuan fell sharply against the U.S. dollar on Tuesday as tight onshore liquidity conditions fueled rising expectations of further monetary easing, according to analysts.
The currency, which is still tightly controlled by the Chinese central bank, declined around 0.5 percent to a four-month low of 6.2064 against the dollar. At one stage it was on track for its biggest single-day decline since 2008, but it trimmed losses to finish the session at 6.1855.
“Despite the recent interest rate cut, domestic liquidity has tightened,” Nizam Idris, head of strategy, fixed income and currencies at Macquarie told CNBC, noting that short-term interest rates in China have risen sharply in recent days.
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