Breaking News
Investing Pro 0
NEW! Get Actionable Insights with InvestingPro+ Try 7 Days Free

Chinese Yuan Hits 3-Mth Low After Surprise Rate Cut, Asia FX Sinks

Forex Aug 16, 2022 10:58
Saved. See Saved Items.
This article has already been saved in your Saved Items
 
© Reuters.
 
CNY/USD
0.00%
Add to/Remove from a Portfolio
Add to Watchlist
Add Position

Position added successfully to:

Please name your holdings portfolio
 
DXY
+0.29%
Add to/Remove from a Portfolio
Add to Watchlist
Add Position

Position added successfully to:

Please name your holdings portfolio
 
PHP/USD
-0.16%
Add to/Remove from a Portfolio
Add to Watchlist
Add Position

Position added successfully to:

Please name your holdings portfolio
 
IDR/USD
0.00%
Add to/Remove from a Portfolio
Add to Watchlist
Add Position

Position added successfully to:

Please name your holdings portfolio
 
MYR/USD
-0.12%
Add to/Remove from a Portfolio
Add to Watchlist
Add Position

Position added successfully to:

Please name your holdings portfolio
 
AUD/USD
-0.35%
Add to/Remove from a Portfolio
Add to Watchlist
Add Position

Position added successfully to:

Please name your holdings portfolio
 

By Ambar Warrick 

Investing.com-- China’s yuan fell the most among Asian currencies on Tuesday, hitting a three-month low as a surprise rate cut by the central bank raised concerns over slowing economic growth. 

The yuan sank 0.2% to 6.7881 to the dollar - a level last seen in May - after the People’s Bank of China cut its loan prime rate to 2.75% from 3.70% on Monday.  

The rate cut was also helmed by data showing Chinese retail sales and industrial production grew less than expected in July, pointing to an extended slowdown in the mainland.

Weakness in the Chinese economy has been spurred largely by a series of COVID-19 lockdowns this year. Despite their clear economic impact, the Chinese government is hesitant to scale back its strict zero-COVID policy. 

Chinese markets have suffered as a result, with analysts downgrading their outlook for economic growth this year. Concerns over China have also dented global commodity markets with the prospect of weaker demand. 

Losses in China spilled over into other Asian markets, given the country’s position as a dominant trading partner. The Australian dollar plummeted over 1% on Monday, before rising slightly on Tuesday. 

The Malaysian ringgit, Indonesian rupiah, and Philippine peso - countries that depend on China as an export destination - fell between 0.1% and 0.3%. All three currencies had fallen sharply on Monday, after the rate decision. 

ING downgraded its Chinese economic growth forecast to 4% from 4.4% for 2022, citing increased economic headwinds from slowing activity.

“Real estate property construction, home sales and mortgages are just part of the weaknesses we have seen in the Chinese economy. Export demand could also weaken… this will derail job growth in China, creating a vicious cycle on consumption and economic growth despite COVID measures becoming more flexible,” Iris Pang, Chief Economist, China, at ING wrote in a note. 

The U.S. dollar rose after the Chinese data and rate decision, further pressuring most Asian units. The dollar index and dollar index futures traded flat on Tuesday, after adding nearly 1% each in the prior session.

 
Chinese Yuan Hits 3-Mth Low After Surprise Rate Cut, Asia FX Sinks
 

Related Articles

Asia FX Recovers, But Hawkish Fed Caps Gains
Asia FX Recovers, But Hawkish Fed Caps Gains By Investing.com - Oct 06, 2022

By Ambar Warrick  Investing.com-- Most Asian currencies recovered from recent losses on Thursday as pressure from the dollar and Treasury yields eased slightly, although hawkish...

Add a Comment

Comment Guidelines

We encourage you to use comments to engage with users, share your perspective and ask questions of authors and each other. However, in order to maintain the high level of discourse we’ve all come to value and expect, please keep the following criteria in mind: 

  • Enrich the conversation
  • Stay focused and on track. Only post material that’s relevant to the topic being discussed.
  • Be respectful. Even negative opinions can be framed positively and diplomatically.
  •  Use standard writing style. Include punctuation and upper and lower cases.
  • NOTE: Spam and/or promotional messages and links within a comment will be removed
  • Avoid profanity, slander or personal attacks directed at an author or another user.
  • Don’t Monopolize the Conversation. We appreciate passion and conviction, but we also believe strongly in giving everyone a chance to air their thoughts. Therefore, in addition to civil interaction, we expect commenters to offer their opinions succinctly and thoughtfully, but not so repeatedly that others are annoyed or offended. If we receive complaints about individuals who take over a thread or forum, we reserve the right to ban them from the site, without recourse.
  • Only English comments will be allowed.

Perpetrators of spam or abuse will be deleted from the site and prohibited from future registration at Investing.com’s discretion.

Write your thoughts here
 
Are you sure you want to delete this chart?
 
Post
Post also to:
 
Replace the attached chart with a new chart ?
1000
Your ability to comment is currently suspended due to negative user reports. Your status will be reviewed by our moderators.
Please wait a minute before you try to comment again.
Thanks for your comment. Please note that all comments are pending until approved by our moderators. It may therefore take some time before it appears on our website.
 
Are you sure you want to delete this chart?
 
Post
 
Replace the attached chart with a new chart ?
1000
Your ability to comment is currently suspended due to negative user reports. Your status will be reviewed by our moderators.
Please wait a minute before you try to comment again.
Add Chart to Comment
Confirm Block

Are you sure you want to block %USER_NAME%?

By doing so, you and %USER_NAME% will not be able to see any of each other's Investing.com's posts.

%USER_NAME% was successfully added to your Block List

Since you’ve just unblocked this person, you must wait 48 hours before renewing the block.

Report this comment

I feel that this comment is:

Comment flagged

Thank You!

Your report has been sent to our moderators for review
Continue with Google
or
Sign up with Email