WSJ:China Yuan Down Late On Fed Announcement, Corporate Dollar Demand
Vs Parity Previous
USD/CNY Central Parity 6.3040 6.3004
USD/CNY OTC 0830 GMT 6.3642 +0.95% 6.3599
High 6.3659 +0.98%
Low 6.3610 +0.90%
SHANGHAI--China's yuan fell against the U.S. dollar late Thursday after the U.S. unit gained against major currencies overseas because of the Federal Reserve's announcement it was extending a bond-purchase program set to expire this month, but not going further in easing policy.
On the over-the-counter market, the dollar was at CNY6.3642 around 0830 GMT, higher than Wednesday's close of CNY6.3599. It traded in a range of CNY6.3610 to CNY6.3659.
The People's Bank of China set the dollar/yuan central parity rate at 6.3040, higher than Wednesday's 6.3004, following the dollar's strength overseas. The ICE Dollar Index, which tracks the dollar against a trade-weighted basket of currencies, was at 81.395 late Wednesday in New York, up from 81.378 late Tuesday. At 0845 GMT, the index was at 81.599.
Traders said the dollar also higher partly due to some regular end-month dollar demand from companies.
A disappointing HSBC Manufacturing Purchasing Managers reading also weighed.
The HSBC China Manufacturing Purchasing Managers Index fell to 48.1 in June compared with a final reading of 48.4 in May. It was the eighth straight month of a reading below 50, which indicates contraction from the previous month.
"The yuan is facing short-term pressure from uncertainty in the domestic economy and what the government may plan in terms of policy ahead of the power change in the fall," said a trader with a local bank based in Shanghai.
China's Communist Party will hold its 18th congress in autumn, when it will announce the country's new leadership.
The yuan has fallen 1.1% since the start of 2012.
Offshore, one-year dollar/yuan nondeliverable forward contracts were at 6.4040/6.4070 from 6.4035/6.4065 late Wednesday, implying a 0.6% fall by the yuan over the next year.
In the offshore yuan market in Hong Kong, where the Chinese currency floats freely, the dollar was at CNY6.3650 late Thursday, higher than CNY6.3605 late Wednesday.
