China’s Yuan slumped against the U.S. dollar on Friday, May 25, as the central bank lowered its midpoint to the weakest in four months, but losses were limited by rising corporate dollar selling.
The Chinese currency is on course for its second straight losing week and is now hovering around 4-month lows versus the dollar amid ongoing trade frictions between China and the United States.
Prior to market opening, the People’s Bank of China set the midpoint rate at 6.3867 per dollar, its weakest since Jan. 24, 51 pips or 0.08 percent softer than the previous fix of 6.3816.
However, the Chinese currency has faced strong support around 6.39 per dollar in recent sessions, traders said, where selling interest in the greenback has emerged from corporate clients unloading their dollars.
The spot market opened at 6.3879 per dollar, eased to a low of 6.3910 at one point before it edged up to 6.3871 by midday, 101 pips weaker than the previous late session close and 0.01 percent softer than the midpoint.
If the yuan finishes the late night session at the midday level, it would have weakened 0.16 percent to the dollar for the week, following a 0.7 percent loss a week earlier.
In global markets, risk appetite improved on Friday morning and the dollar edged up against its major trading partners. U.S. President Donald Trump called off a June summit with North Korean leader Kim Jong Un on Thursday.
But North Korea’s response was that it was open to resolving issues, which helped calm investor fears of an escalation in the standoff.
The global dollar index, a gauge that measures the unit’s strength against a basket of currencies, rose to 93.913 at midday from the previous close of 93.758. Separately, any progress on trade talks between the world’s two largest economies remained a key market focus, Reuters reports.
