China's yuan hits 15-year low after official guidance breaches key level
FILE PHOTO: Banknotes of Chinese yuan and U.S. dollar are seen in this illustration picture taken September 29, 2022. REUTERS/Florence Lo/Illustration
SHANGHAI : China's yuan hit a near 15-year low against the dollar on Tuesday, after the central bank fixed the official guidance rate at its lowest level since the global financial crisis of 2008.
Prior to market opening, the People's Bank of China (PBOC) set the midpoint rate at 7.2081 per dollar, the lowest since Jan. 24, 2008. That was 313 pips or 0.43 per cent weaker than the previous fix of 7.1768.
Currency traders took the official guidance's breach of the key 7.2 per dollar level to mean that authorities would allow further yuan weakness.
The onshore yuan opened at 7.3201 per dollar and quickly touched 7.3280, the lowest level since Dec. 26, 2007. It last traded at 7.3075 as of 0246 GMT, 25 pips weaker than the previous late session close.
The yuan's weakness reflected recent U.S. dollar strength, along with downbeat Chinese economic data and COVID disruptions, analysts at OCBC Bank said in a note.
The Federal Reserve's aggressive monetary tightening has supported the greenback and U.S. yields in recent months, and investors were eyeing a monetary policy meeting this week for fresh clues on the future pace of rate hikes.
"Tightening COVID prevention and temporary lockdown measures could raise more concerns over China's economic growth," the analysts added, noting the next supportive level for the yuan could be 7.4 per dollar.
China's COVID-19 curbs forced the temporary closure of Disney's Shanghai resort on Monday, while production of Apple Inc iPhones at a major contract manufacturing facility could drop by 30 per cent in November due to coronavirus restrictions, a source told Reuters.
