China's yuan slips to fresh 7-month lows as outflows mount

economictimes.indiatimes.com:

China's yuan dipped to a fresh seven-month low against the dollar on Friday, hurt by portfolio outflows from mainland financial markets and speculation the central bank is gradually allowing the currency to weaken. By 0245 GMT, the yuan was just off a November low of 7.2613, having fallen from 7.2575 earlier in the day. At the lows, it was a mere 7 pips away from the weak side of the band in which the People's Bank of China manages the currency.

The currency's drop to 7-month lows in the previous session was triggered in part by a weak central bank fixing rate, which spurred market speculation authorities may be prepared to see it weaken. But on Friday, in what seemed like efforts to prevent a quicker decline, the PBOC set a slightly stronger mid-point fixing at 7.1196 per dollar, 1,502 points firmer than a Reuters' estimate. «It seems that PBOC does not want to have the fix above the 7.12 so soon,» Maybank analysts said in a note.

«That sends a signal to markets that they still want to have strong control over the yuan and want to prevent speculative pressure from building against the yuan as well,». Spot yuan opened at 7.2575 per dollar and was last trading 2 pips weaker than the previous late session close and 1.98% weaker than the midpoint. In cash settlement transactions, the yuan was quoted at 7.2621 per dollar, implying it had already hit the weak end of the band in the overnight tenor.