Yuan suffers biggest weekly losses in 3 months

(New edition of the title, updated citations)

HONG KONG, May 19 (Reuters) – China’s yuan rebounded on Friday after Chinese authorities tried to slow the currency but weekly losses were still the biggest in three months. The yuan was under pressure from a slow economic recovery, low bond yields and a broad appreciation of the US dollar.

The yuan in the offshore market at 14:13 Moscow time rose 0.32% to 7.0271 at the start of the session, updating to a low since December.

At the end of trade in Shanghai, the yuan was able to strengthen to 7.0235 per dollar, but continued to fall 1.04% at the end of the week, showing its worst week in three months after the Central Bank of China announced its weakest average fixed rate since December 5 at 7.0356 yuan to the dollar.

Investors took the weak fixing as a sign that the central bank will tolerate further weakening of the yuan.

However, later on Friday, China’s central bank promised to sharply curb currency volatility. Previously, currency traders spotted large state-owned markets trading yuan against dollars in the mainland futures market, indicating efforts by authorities to slow down the currency’s steep decline.

State-owned banks usually trade forex on behalf of the Central Bank of China, but can also conduct transactions on their own initiative.

“Macro data from China for April suggest the recovery in growth is waning,” wrote Alvin Tan of RBC Capital Markets.

The weakening of the yuan took place against the backdrop of the second consecutive weekly increase in the dollar index.

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(Georgina Lee)