Chinese yuan weakened on Thursday along with the euro and sterling as the US dollar strengthened on tax reforms proposed by US President Donald Trump.
Onshore yuan, which is mainly traded in Shanghai, was at 6.8970 per dollar in early trading on Thursday, down 0.08 per cent from Wednesday when it weakened 0.14 per cent.
Offshore yuan, traded in Hong Kong, was down 0.09 per cent on Thursday morning to 6.9018 after it had fallen 0.11 per cent on Wednesday.
The weaker yuan came as the People’s Bank of China set the yuan reference rate at 6.8896 per US dollar, weaker by 0.07 per cent or 51 basis points from Wednesday’s fix.
“While US tax reform details remain elusive, the bottom line should be dollar positive. We’ve seen a move higher for the dollar on regional currencies as dollar demand is starting to perk up,” said Stephen Innes, senior trader at Oanda
“Investor confidence in China will be fraught with uncertainty through 2017 as US interest rates are expected to rise and mainland officials deal with the perils of deleveraging the China money ball. Restoring financial stability will be high on the politburo’s agenda,” he said.
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