Â
>>REAL-TIME UPDATES IN THE WIRE. CLICK HERE<<<
Â
Â
China’s yuan weakened against the dollar, with losses widening in afternoon trade, as investors remained cautious after a stronger-than-expected central bank fixing fueled speculation that the authorities’ tolerance for yuan weakness may be nearing its end.
The onshore yuan weakened by more than 500 pips at one point to hit 7.2339 per dollar, the weakest level in seven months and the offshore yuan broke through 7.24 per dollar mark at one point.
The People’s Bank of China set the yuan’s daily fixing at 7.2056 per U.S. dollar on Monday before the market opened, weaker than the previous fix of 7.1795. The spot rate is allowed to trade with a range 2% above or below the official fixing on any day.
The currency has been weighed down by China’s weakening economic growth and the wide interest rate differential between the US and China. Although in recent weeks China has cut the benchmark lending rate – loan prime rates, analysts said modest interest cuts alone would have limited impact in stimulating weak household demand without fiscal support measures.
The global dollar index fell to 102.748 from the previous close of 102.903. The dollar was near a one-week high on Monday against its major peers, after the abortive mutiny in Russia over the weekend put investors on guard.