CHINA’S yuan weakened to its lowest against the U.S. dollar in almost eight months yesterday, nearing its daily limit, adding to speculation that easing steps by global central banks are prompting the People’s Bank of China to guide the currency weaker.

    The central bank set the midpoint rate at 6.1384 per dollar prior to market open, weaker than the previous fix of 6.1342.

    The spot market opened at 6.2423 per dollar and hit an intraday low of 6.2569 in early trade, the lowest level since June 4 and was 1.89 percent weaker than the midpoint.

    The spot rate is currently allowed to trade up to 2 percent above or below the official fixing on any given day.

    Putting pressure on the yuan has been the strong dollar. “The dollar’s global strength is really surprising seen in the domestic market,” said a dealer at a commercial bank in Shanghai.

    “The market gets more pessimistic than the central bank over the prospects of the yuan, even though the central bank had already set a weaker midpoint earlier in the day,” he said.

    The yuan trimmed some losses to stand at 6.2542 by midday, but was still down 0.41 percent from Friday’s close.

    The dollar index hit an 11-year high Friday, after the European Central Bank announced a massive quantitative easing program.

    Yesterday morning, the index hovered near that high as the victory of an anti-austerity party in Greek elections put new pressure on the euro.

    The offshore yuan was trading 0.22 percent weaker from the onshore spot at 6.26 per dollar by midday. Offshore one-year non-deliverable forwards contracts, considered the best available proxy for forward-looking market expectations of the yuan’s value, traded at 6.372 by midday. (SD-Agencies)