China's yuan slides to 2-month low on disappointing inflation data
SHANGHAI, May 11 (Reuters) - China's yuan slipped to a two-month low against the dollar on Thursday, as disappointing April inflation data and the 's big four state banks had been told to lower deposit rate ceilings dragged on sentiment.
China's consumer prices rose at the slowest pace in more than two years in April, while factory gate deflation deepened, suggesting more stimulus may be to boost a patchy post-COVID economic recovery.
Prior to the market's opening, the People's Bank of China set the midpoint rate CNY=PBOC at 6.9101 per U.S. dollar, 198 pips firmer than the previous fix 6.9299.
Spot yuan CNY=CFXS opened at 6.9300 per dollar and was changing hands at 6.9348 at midday, 60 pips weaker than the previous late session close. It earlier slipped to 6.9413, the lowest since March 10.
China's consumer price and producer price data reinforced the weakness in domestic demand highlighted in a string of other economic indicators, said Citi analysts.
"Yuan could continue to underperform, especially on a trade-weighted basis, with a move towards the 98-figure by the China Foreign Exchange Trade System (CFETS) RMB index only a matter of time," said Maybank in a .
Further weakening the yuan is the that China had told its "big four" state-owned banks to reduce the ceiling on interest rates they pay on some deposits.
UBS analysts said on Thursday that China government bond yields fell across the curve, extending declines following the deposit-rate , adding that yields may have more downside risks.
By midday, the global dollar index .DXY rose to 101.485 from the previous close of 101.477.
The offshore yuan CNH=D3 was trading 84 pips away from the onshore spot at 6.9432 per dollar.
The one-year forward value for the offshore yuan CNH1YOR= traded at 6.7718 per dollar, indicating a roughly 2.53% appreciation within 12 months.
The yuan market at 0255 GMT:
ONSHORE SPOT:
Item | Current | Previous | Change |
PBOC midpoint CNY=SAEC | 6.9101 | 6.9299 | 0.29% |
Spot yuan CNY=CFXS | 6.9348 | 6.9288 | -0.09% |
Divergence from midpoint* | 0.36% | ||
Spot change YTD | -0.50% | ||
Spot change since 2005 revaluation | 19.35% | ||
Key indexes:
Item
| Current | Previous | Change |
Dollar index | 101.485 | 101.477 | 0.0 |
*Divergence of the dollar/yuan exchange rate. Negative indicates that spot yuan is trading stronger than the midpoint. The People's Bank of China (PBOC) allows the exchange rate to rise or fall 2% from official midpoint rate it sets each morning.
OFFSHORE CNH MARKET
Instrument | Current | Difference from onshore |
Offshore spot yuan CNH= * | 6.9432 | -0.12% |
Offshore -deliverable forwards CNY1YNDFOR= ** | 6.7747 | 2.00% |
*Premium for offshore spot over onshore CNY=CFXS
**Figure reflects difference from PBOC's official midpoint, since -deliverable forwards are settled against the midpoint. CNY=SAEC.
(Reporting by Shanghai Newsroom
Editing by Shri Navaratnam)