© Reuters. FILE PHOTO: A Chinese yuan banknote is seen in this illustration photo May 31, 2017. REUTERS / Thomas White / Illustration /
SHANGHAI (Reuters) – Falling against the dollar rose in early trades on Wednesday, with its offshore trades falling to record lows, pressured by expectations of a Federal Reserve The state will raise interest rates.
China’s fell to 7.2349, its lowest level since such data became available in 2011. It traded at 7.2286 per dollar by 0241 GMT.
Its domestic counterpart followed suit and fell to a low of 7,2302 per dollar in early trading, its lowest level since the 2008 global financial crisis. It traded at 7.2240 at around 0241 GMT, versus the previous late night close was 7.18.
“Non-dollar currencies were all depreciated in the initial trades, the yuan could not get out,” said a trader at a foreign bank.
Some currency traders also said corporate dollar buying was strong on Wednesday, adding to pressure on the yuan.
Prior to the market opening, the People’s Bank of China (PBOC) had averaged rates at 7.1107 per dollar, 385 pips or 0.54% weaker than the previous fix of 7.0722.
The drop comes even as China’s central bank on Monday announced new steps to slow the yuan’s recent decline by making it expensive to bet against the currency. than.
Earlier this month, the PBOC also cut the amount of foreign exchange reserves that financial institutions must hold in a move also seen as aimed at slowing the yuan’s decline.
A second trader at a Chinese bank said efforts by authorities to stem the weakening of the yuan were having limited impact.
A source told Reuters late on Tuesday that China’s monetary authorities are asking local banks to restore a yuan peg they abandoned two years ago when they found out. How to control and protect a rapidly waning currency.
The dollar strengthened as the US central bank raised interest rates by 3/4 percentage point for the third time in a row last week and signaled that borrowing costs will continue to rise this year.