The yuan fell as the People’s Bank of China (PBOC) cut its daily reference rate by the most in six weeks, damping speculation that the exchange rate will be kept stable before a meeting of the G20 central bankers and finance ministers.
It fell 0.04 percent to 6.5257 to the US dollar as of 4:43pm in Shanghai, China Foreign Exchange Trade System prices showed.
The central bank’s fixing was cut by 0.17 percent, more than the decline of about 0.015 percent that Australia & New Zealand Banking Group Ltd strategist Irene Cheung said she had been expecting.
While the central bank has said it aims to keep the yuan steady against a basket of currencies, it stabilized its fixings versus the greenback last month after an eight-day run of reductions through Jan. 7 heightened concern about the state of China’s economy and roiled global markets.
Strategists in Hong Kong including Kenix Lai (賴春梅) at Bank of East Asia Ltd and Qi Gao at Scotiabank were predicting policymakers would keep the exchange rate fairly stable before the G20 meeting on Friday and Saturday in Shanghai.
“We haven’t really seen a consistent framework in the management of the currency,” Bank of Singapore Ltd foreign-exchange strategist Sim Moh Siong said. “Maybe all this flip-flopping we’re seeing is what the authorities mean by saying they want flexibility in the currency.”
The offshore yuan fell as much as 0.15 percent, before paring its loss to 0.09 percent.
It has gained 0.9 percent this month after weakening 0.4 percent last month, when the currency sank to five-year lows in both Hong Kong and Shanghai.
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