The Chinese yuan declined to the lowest level in 20 months after the People’s Bank of China reduced the currency fix as it rose against the dollar.
The yuan fell 0.07 percent to 6.2548 a dollar in Shanghai trading. This represents a 0.2 percent drop from the 6.2676 that it hit on April 30, the lowest mark since October 2012. The yuan has dropped 3.2 percent since the start of the year, making it Asia’s worst performing currency.
The China’s central bank lowered the reference rate 0.02 percent to 6.1708 against the dollar. This comes after the Bloomberg Dollar Spot Index surged to a two-month high on Wednesday. Economists surveyed by Bloomberg expect fresh U.S. jobless claims last week to increase while growth in non-farm payrolls fell in May.
“If you look at the global environment, there’s the ECB meeting today and the U.S. non-farm payrolls tomorrow,” Suan Teck Kin, an economist at United Overseas Bank Ltd in Singapore, said. “You’ll probably see a bit of dollar strength, so that could push up the dollar against the yuan.”
The onshore yuan’s one-month implied volatility, which measures the expected shifts in the exchange price used to assign value to options, rose 0.06 percentage point, or six basis points, to 1.31 percent.
Separately, the Russia’s ruble advanced for the second straight day against the U.S. dollar after it ended its seven-day losing streak on Tuesday. This is after the Group of Seven nations decided against rolling out more sanctions against Russia. The ruble advanced 0.4 percent to trade at 34.85 per U.S. dollar at midday in Moscow. To register for a free 2-week subscription to ForexMinute Premium Plan, visit www.forexminute.com/newsletter.
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