China's yuan weakens on easing expectations, dollar gains
By Summer Zhen
HONG KONG, July 25 (Reuters) - China's yuan fell slightly against the dollar on Friday after hitting an eight-month high in the previous session, as markets bet the central bank will maintain an easing tone.
The dollar's gains in Asian hours also put pressure on Asian currencies broadly as investors braced for a crucial week that includes U.S. President Donald Trump's tariff deadline.
As of 0349 GMT, the yuan CNY=CFXS was 0.1% lower at 7.1627 to the dollar after trading in a range of 7.1582 to 7.1639.
Prior to the market opening, the People's Bank of China set the midpoint rate CNY=PBOC at 7.1419 per dollar, 190 pips firmer than a Reuters' estimate. The spot yuan is allowed to trade 2% either side of the fixed midpoint each day.
In the previous session, the onshore yuan rose to a high of 7.1478 per dollar - the strongest since November 8, driven by the stronger-than-expected PBOC fixing.
But investors believe that this is just to stabilise the currency rather than hoping for a stronger yuan in near term.
"The PBOC is likely to maintain its accommodative monetary policy stance. External uncertainties, weak inflation, and sluggish credit demand call for further easing," DBS analysts said in a note.
Daniel Tan, multi-asset and fixed-income portfolio manager at Grasshopper Asset Management, expects the PBOC to set an easing tone heading into China’s Politburo meeting towards the end of this month.
The yuan is unchanged against the dollar this month, and 1.9% firmer this year.
On trade talk, U.S. and Chinese officials will meet in Stockholm next week to discuss an extension to the deadline for negotiating a trade deal, U.S. Treasury Secretary Scott Bessent said this week.
Analysts said the de-dollarisation trend may be taking a break as trade uncertainty eased and U.S. equities recovered.
The offshore yuan traded at 7.163 yuan per dollar CNH=, down about 0.11% in Asian trade.
The dollar's six-currency index =USD was 0.103% higher at 97.55.
LEVELS AT 0348 GMT
INSTRUMENT | CURRENT vs USD | UP/DOWN(-) VS. PREVIOUS CLOSE % | % CHANGE YR-TO-DATE | DAY'S HIGH | DAY'S LOW |
Spot yuan CNY=CFXS | 7.1627 | -0.11 | 1.9 | 7.1582 | 7.1639 |
Offshore yuan spot CNH=D3 | 7.163 | -0.11 | 2.43 | 7.152 | 7.1638 |
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