(Yicai Global) Oct. 24 -- The yuan fell against the dollar on rising expectations of a rate hike by the US Federal Reserve, China's state administration of foreign exchange said.
On Oct. 21, the central parity of the yuan against the US dollar (USD) closed 247 base points, or 0.37 percent lower at 6.7558, hitting a new six-year low. It also marked the CNY's biggest fall since Aug. 29.
Recently, the yuan weakened against the dollar, was mainly attributable to a rally of the US currency triggered by heightened expectations of a rate hike by the Fed, Mr. Wang Chunying, SAFE spokesperson said.
He also denied rumors that the USD50,000 cap on foreign exchange had been lifted in six pilot cities, stating that China's foreign exchange administration had not issued any such policies to date.
There was speculation that the central bank was considering lifting the USD50,000 annual limit on foreign exchange for eligible individual investors in the first qualified domestic individual investors program, or QDII2 pilot cities.
These include Shanghai, Tianjin, Chongqing, Wuhan, Shenzhen and Wenzhou, and those individual investors who qualify would be allowed to exchange currencies without any limit.
The USD index rose three percent as of Oct. 20 and currencies of all major developed and emerging markets worldwide depreciated as a result, Mr. Wang said. The euro, the British pound and the Japanese yen all slumped 2.8 percent, 5.6 percent and 2.5 percent respectively against the USD.
JPMorgan's Emerging Market Currency Index fell 0.3 percent, as more than 100 currencies weakened against the USD to varying degrees. During the same period, the CNY's central parity and onshore and offshore exchange rates against the USD fell 0.8 percent, 1 percent and 1.1 percent, respectively, which are rather insignificant losses compared to the global average, Mr. Wang said.
Multilateral exchange rates of the yuan went up against baskets of foreign currencies, despite its devaluation against the USD. The yuan's nominal effective exchange rates against the three currency baskets – CFETS, BIS and SDR –rose respectively 0.2 percent, 0.2 percent and 0.8 percent, so far this month, per data from China's foreign exchange trade system.