Chinese Yuan Falls To 1-1/2-year Low Against U.S. Dollar After Rule Change
The Chinese yuan depreciated against the U.S. dollar in the Asian session on Monday, after the People’s Bank of China announced that financial firms’ need not set aside cash when buying foreign currency for forward settlement.
Financial institutions should hold a 20 percent reserve when conducting some foreign exchange forwards trading before the rule change.
The move is likely to keep the yuan’s strength in check.
The yuan dropped to 6.7268 against the greenback, its lowest level since April 2019. The yuan is likely to locate support around the 6.9 level.
The People’s Bank of China set today’s central parity rate of the yuan at 6.7126 per dollar, compared to Friday’s rate of 6.7796. The Chinese central bank sets central parity rate every morning and allows the yuan to fluctuate up to 2 percent from that level.