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在线翻译:
szdaily -> Markets -> 
Yuan drops to almost six-month low
    2018-06-26  08:53    Shenzhen Daily

THE yuan fell to a 5-1/2-month low against the U.S. dollar yesterday, effectively erasing all of this year’s gains, after the central bank freed up for lending some capital that commercial banks have to hold as reserves.

The People’s Bank of China (PBOC) said Sunday it would cut the amount of cash that some banks must keep in reserves by 50 basis points (bps), releasing US$108 billion in liquidity, to accelerate the pace of debt-for-equity swaps and spur lending to smaller firms.

The reduction in the reserve requirement ratio (RRR) is the central bank’s third in 2018 and came amid worsening trade tensions between China and the United States as well as the U.S. Federal Reserve’s monetary tightening this year.

Stephen Innes, head of Asia-Pacific trading for OANDA, argued the central bank’s latest move was not a policy shift to weaken the yuan and escalate trade tensions, “but rather a case of policy fine-tuning intended to calm investors nerves which are fraying” due to the increasing trade friction.

“With no trade war relief in sight, selling yuan on prospects of a more aggressive PBOC policy shift could be a path of least resistance,” he said.

Prior to yesterday’s market opening, the central bank lowered the midpoint rate for the fourth straight session to 6.4893 per dollar, lowest since Jan. 12. That was 89 pips, or 0.14 percent, weaker than Friday’s fix of 6.4804.

In the spot market, the onshore yuan opened at 6.5200 per dollar and fell to a low of 6.5342 at one point, the weakest level since Jan. 10.

Its offshore counterpart also followed the weakening trend to post its eighth straight day of losses. The offshore yuan was 0.07 percent weaker than the onshore spot at 6.5378 per dollar in yesterday afternoon’s trading.

Analysts at Ping’an Securities said that in the short-term, with strict controls on capital outflows still in place, the central bank “still has some regulatory room under the current yuan fixing mechanism” and depreciation pressure on the yuan “is not huge.”

They said there were keeping their forecast of a “mild depreciation” in the Chinese currency this year.

The yuan lost 0.9 percent to the greenback last week, the worst weekly performance since September, but it fell 0.5 percent on a trade-weighted basis against a basket of trading partners’ currencies, according to official data from the China Foreign Exchange Trade System (CFETS).

The index, published on a weekly and monthly basis, stood at 97.38 last Friday, the CFETS said on its website. (SD-Agencies)

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