CHINA’S yuan fell beyond 6.20 to the U.S. dollar yesterday for the first time since April last year amid market speculation the central bank will keep the currency weak as economic growth slows down.

    The yuan has tumbled 0.8 percent this week after the People’s Bank of China doubled the daily trading band for the currency to 2 percent from the midpoint set each day by the central bank.

    Spot yuan briefly fell to 6.2009 per dollar by midday, down 0.14 percent from Tuesday’s close of 6.1920 and more than 1 percent weaker than the midpoint set earlier of 6.1351.

    “The yuan may not appreciate this year given China’s weak economy,” said a trader in Shanghai. “The return of yuan strength will not only rely on when the economy bottoms out, but when fresh long yuan funds come in.”

    Data this year, including a surprise 18 percent drop in exports in February and soft manufacturing reports, have raised concerns that China may struggle to meet its growth target this year of around 7.5 percent.

    Rising debt worries following the country’s first domestic bond default and the looming bankruptcy of a Chinese developer have added to market jitters.

    Some traders suggested the decline in the currency may reflect the central bank’s desire to offer a sluggish economy some help by effectively easing monetary conditions.

    However, not all traders subscribed to that view. Others said the decline reflected genuine trade to reduce long positions in the currency.

    They pointed to the fact that just two days into the 2 percent band regime, the market had already moved the currency by the equivalent of the previous band’s 1 percent limit.

    When the band was last widened in 2012 — to 1 percent from 0.5 percent — it took the market two weeks to build up the courage to test even the previous band’s width given how closely the central bank controls the market. (SD-Agencies)