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Chinese yuan continues to weaken against USD

Updated: May 30,2018 3:03 PM     Xinhua

BEIJING — The central parity rate of the Chinese yuan weakened against the US dollar for a fifth trading day in a row on May 30.

The central parity rate weakened 186 basis points to 6.4207 against the US dollar on May 30, according to the China Foreign Exchange Trade System (CFETS).

The latest decline has brought the yuan-dollar exchange rate to the lowest level since January.

Analysts said the depreciation was a result of a stronger dollar.

The dollar index, which measures the greenback against six major peers, increased 0.93 percent from May 22 to May 28. On May 29 alone, it gained 0.46 percent to 94.848 in late trading.

The strong dollar also pushed down the CFETS RMB Index, which measures the yuan’s strength relative to a basket of currencies, by 0.25 points to 97.63 last week, the first weekly decline in seven weeks.

However, the recent depreciation may only be a normal correction as the CFETS index remains at a high level.

Investment bank China International Capital Corporation (CICC) said the currency is not facing significant depreciation pressure.

Meanwhile, domestic exporters are willing to sell their dollars as they suffered exchange losses last year from a weak dollar, which will provide more support for the yuan, said the CICC.

In China’s spot foreign exchange market, the yuan is allowed to rise or fall by 2 percent from the central parity rate each trading day.

The central parity rate of the yuan against the US dollar is based on a weighted average of prices offered by market makers before the opening of the interbank market each business day.