SHANGHAI- China’s yuan slipped to a one-week low against the dollar on Friday, reflecting a rebound in greenback in overseas markets, while the central bank continued to pare back support through its official daily fixing.
Federal Reserve Chair Jerome Powell’s comments signaling no rush to cut interest rates in the United States supported the greenback and pressured emerging market currencies.
Fears of a possible escalation in trade disputes between the world’s two largest economies in coming weeks also remained a drag on the yuan sentiment, traders said.
Meanwhile, the central bank appeared to dial back its support for the Chinese currency via its daily midpoint fixings, with a months-long gap between the official guidance and market projections narrowing. Market participants interpreted that as a sign policymakers are looking to prevent any fast yuan appreciation in a benign dollar environment.
Prior to the market opening on Friday, the People’s Bank of China (PBOC) set the midpoint rate around which the yuan is allowed to trade in a 2 percent band, at 7.1760 per dollar, its weakest since January 20 and 663 pips firmer than a Reuters’ estimate of 7.2423.
