The People’s Bank of China has set the USD/CNY reference rate at 6.7795 for Monday’s trading session, marking a slight weakening from Friday’s fix of 6.7787. The adjustment comes in marginally weaker than the Reuters estimate of 6.7786, signaling continued pressure on the Chinese yuan.
The daily reference rate serves as the midpoint around which the yuan can trade within a two percent band in either direction during onshore sessions. This latest fixing maintains the yuan’s softer trajectory against the dollar, reflecting ongoing economic headwinds facing China’s economy including deflation concerns and subdued domestic consumption.
Currency traders and Asia-Pacific market participants should monitor whether the yuan tests the weaker end of its trading band, which could trigger increased intervention from state banks. The move also impacts emerging market currencies that often track yuan movements, particularly across the Asian trading bloc.
FXnCO Insight
Watch for potential PBOC intervention through state banks if USD/CNY approaches 6.91, which would represent the two percent band limit.
Source: FXStreet