Yuan slips to one-week low after US court blocks Trump's tariffs
SHANGHAI, May 29 (Reuters) - China's yuan fell to one-week low against the U.S. dollar on Thursday, tracking declines in other Asian currencies, after a court blocked President Donald Trump from imposing his "Liberation Day" import tariffs.
The spot yuan CNY=CFXS slumped to 7.2109 per dollar immediately after market opened, lowest level since May 21 and 142 pips lower than the previous late session close, before reversing some losses.
"FX pairs that are used to express the consensus bearish USD view may see some covering pressure, even if the economic impact should be positive for the foreign currency," UBS analysts said in a note to their investors.
The offshore yuan CNH=D3 also fell, along with most other Asian currencies.
The dollar index .DXY was up 0.4% to 100.30, back above 100 for the first time in a week.
The knee jerk reaction of Asian currencies weakening against the dollar may not last, said Michael Wan, senior currency strategist at MUFG.
"The tariffs on Asia are likely to stay amidst the legal battle, coupled with the legal uncertainty also potentially crimping U.S. growth and investment plans further," Wan said.
Prior to the market opening, the People's Bank of China set the midpoint rate CNY=PBOC at 7.1907 per dollar, 126 pips firmer than a Reuters' estimate. The spot yuan is allowed to trade 2% either side of the fixed midpoint each day.
The PBOC has set the yuan's daily fixings much closer to Reuters estimates this month. The narrowing fixing-estimate gaps suggested easing yuan depreciation pressure and authorities trying to avoid sharp rallies in the currency which may hurt exports amid ongoing tariff tensions.
The yuan is up 1.0% against the dollar this month, and 1.4% firmer this year.
The spot yuan opened at 7.2057 per dollar and was last trading at 7.1999 as of 0250 GMT, 32 pips lower than the previous late session close.
The offshore yuan traded at 7.199 yuan per dollar CNH=, down about 0.09% in Asian trade.
LEVELS AT 0250 GMT
INSTRUMENT | CURRENT vs USD | UP/DOWN(-) VS. PREVIOUS CLOSE % | % CHANGE YR-TO-DATE | DAY'S HIGH | DAY'S LOW |
Spot yuan CNY=CFXS | 7.1999 | -0.06 | 1.38 | 7.1971 | 7.2109 |
Offshore yuan spot CNH=D3 | 7.199 | -0.09 | 1.9 | 7.196 | 7.2076 |
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