Yuan Falls to Lowest Point Against Dollar Since January
Xu Wei
DATE:  Jun 04 2018
/ SOURCE:  Yicai
Yuan Falls to Lowest Point Against Dollar Since January Yuan Falls to Lowest Point Against Dollar Since January

(Yicai Global) June 4 -- The Chinese yuan's central parity rate against the dollar hit its lowest point since January 18 after it slid 130 points to 6.4208 today.

The dollar has been on the rise since April, market observers pointed out, adding that future increases mainly depend on the relative performances of the US and the European economy, with a weak euro making for a strong dollar.

Without this boost, it could be difficult for the dollar to continually strengthen, leading to greater uncertainty in the future, they added. It is still too early to say if the greenback's rally is over, and it will take time for the yuan to regain its poise against it.

The yuan traded at 6.4078 to the dollar on the previous trading day, with an official closing price of 6.4169 at 4:30 p.m. and 6.4180 at 11:30 p.m.

In international currency markets, the dollar index rose 0.23 percent to 94.1983 last Friday on strong US non-farm payrolls data in May. Data on the same day showed the US economy added 223,000 jobs in May, far surpassing expectations of 188,000. The unemployment rate fell to 3.8 percent, the same level as that of April 2000, both representing the lowest levels since 1969.

Expectations of the Federal Reserve hiking interest rates rose after the data was published. The likelihood of a 25-basis-point rise in June increased in the range of 1.75-2 percent to 93.8 percent from 88.8 percent, according to CME's FedWatch. The probability of a 25-basis-points rate increase in September rose in the range of 2-2.25 percent at 71.1 percent, while the probability of another 25-basis-points rate hike in December rose to 35.8 percent from 30.5 percent earlier.

Analysis indicates that despite the recent devaluation of the yuan, China's domestic economy is stable and the market views the yuan as a safe-haven currency. Therefore, its decline is far lower than other non-US currencies.

Editor: William Clegg

Follow Yicai Global on
Keywords:   RMB,USD,Central Parity Rate