YUAN HITS FRESH 2012 LOW, SLOW DEPRECIATION SEEN
DATE: 30/05/2012
SHANGHAI: The yuan fell against the dollar on Wednesday,
hitting a fresh 2012 low, as the dollar index reached its highest level since
September 2010 in Asian trade amid lingering worries over political and
economic troubles in the euro zone.
Spot yuan hit an
intraday low of 6.3561 per dollar in morning trade, its lowest level since
mid-December. It touched an intraday high of 6.3522 and was trading at 6.3552
at midday, slightly weaker than Tuesday's close of 6.3480.
The People's Bank of
China (PBOC) set the yuan's midpoint at 6.3297 against the dollar, slightly
weaker than Tuesday's 6.3262 but stronger than Tuesday's close, giving a clear
signal that it may allow the yuan to depreciate but only at a controlled pace.
"China appears
ready for a round of yuan depreciation," said a trader at a Chinese state-owned
bank in Beijing.
"But gradualism
is typical of China's currency policy. The PBOC will use the same strategy it
used for yuan appreciation in the previous few years. This time, it will let
the yuan depreciate but at a slow and steady pace the same as before."
The yuan has shed 0.71
percent this month and 0.96 percent so far this year under pressure from a
strengthening dollar as well as China's worse-than-expected economic slowdown.
The dollar index hit a
fresh recent high of 82.633 in Asian trade on Wednesday as the euro fell,
nearing a two-year low, hurt by worries about Spain's soaring borrowing costs.
Growth in China's
gross domestic product slowed to a near three-year low of 8.1 percent in the
first quarter. Many economists now expect GDP growth could fall below 8 percent
in the second quarter.
POWERED BY: THE ECONOMIC
NEWS
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