PBOC Cuts Fixing as Yuan Retreats From 19-Year High

China’s yuan fell for the first time in six days, retreating from a 19-year high, as the central bank lowered the reference rate and monetary easing in Europe bolstered demand for dollars.

The People’s Bank of China cut the fixing by 0.11 percent to 6.2152 per dollar today, the biggest reduction since April 18. The Dollar Index climbed by most in three weeks after European Central Bank President Mario Draghi said it is possible a negative interest rate will be used to rescue the euro-area economy. Growth in China’s services output slowed in April, an official Purchasing Managers’ Index showed today, after reports this week indicated manufacturing is also losing momentum.

“Dollar demand surged on Draghi’s comments and so the yuan got dragged into a minor retreat today,” said Stella Lee, president of Success Wealth Management Ltd. in Hong Kong. “China data is a bit disappointing. Yet, the yuan is likely to remain strong as capital inflows continue.”

Bloomberg

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