The Yuan Is Asia’s Weakest Currency 

(Bloomberg) -- The yuan fell after the People’s Bank of China set the daily reference rate weaker than expected, while stocks rebounded following their biggest sell-off in eight months as Chinese trade data beat estimates.

The offshore-traded yuan slid as much as 0.41 percent to 6.9066 per dollar after the central bank weakened the fixing for a ninth session. The onshore rate also fell. The Hang Seng Index was up 1.6 percent as of 1:50 p.m. in Hong Kong, with Tencent Holdings Ltd. heading for its biggest gain since August 2015 after sliding for a record 10 days. Shanghai’s benchmark reversed morning losses and was 0.3 percent higher.

The fixing suggests “the PBOC isn’t concerned about yuan depreciation pressures,” as capital outflows are muted, said Tommy Xie, an economist at Oversea-Chinese Banking Corp. in Singapore. “Investors still prefer to buy dollars on the dip against the yuan, given the backdrop of the trade war, China’s economic slowdown and monetary easing.”

The yuan has fallen about 9 percent against the dollar over the past six months, ranking it among the world’s weakest currencies in that period. Friday’s reference rate of 6.9120 per dollar was weaker than the average estimate of 6.9051 in a survey of traders and analysts. The psychologically key level of 7 is in view, with brokerages including Bank of America Merrill Lynch saying they expect the currency to fall through that line in coming months.

As the U.S. prepares to release its twice-a-year report on trading partners’ currencies next week, Treasury Secretary Steven Mnuchin has been advised by staff that China isn’t manipulating the yuan, Bloomberg reported, citing two people familiar with the matter. Mnuchin declined to comment on the report, saying the U.S. wants to make sure the yuan isn’t being used for competitive devaluation.

Trade tension doesn’t appear to have dented demand at home and abroad. China’s September exports in dollar terms rose 14.5 percent from a year earlier, beating the 8.2 percent forecast. Imports climbed 14.3 percent, leaving a trade surplus of $32 billion.

The Shanghai Composite Index, meanwhile, is among the world’s worst performing equity gauge this year, down 22 percent, as headwinds ranging from the trade war, an economic slowdown and weakening currency kept domestic investors on the sidelines. After tumbling the most since 2016 on Thursday, the benchmark fell as much as 1.8 percent Friday before reversing the loss. The Shenzhen Composite Index is down 10 percent this week.

Hong Kong fared better. The Hang Seng China Enterprises Index rose to 10,276.88 as companies from Tencent to China Vanke Co. rebounded from heavy losses. The offshore Chinese gauge is still down for the week though after plunging the most since Feb. 9 on Thursday. Tencent advanced 5.8 percent after tumbling 19 percent over the previous 10 sessions. It’s still down 44 percent from January.

Brilliance China Automotive Holdings Ltd. was the worst performer of the day on the MSCI Asia Pacific Index, plunging by a record 25 percent after agreeing to give BMW AG control of their joint venture. A wide range of analysts cut their price targets and ratings on the company, saying it would diminish its exposure to future growth in the world’s largest auto market.

©2018 Bloomberg L.P.