Yuan Drops as Central Bank Sets Reference Rate Lower
The Chinese yuan was weaker today after the nation’s central bank cut the daily reference rate on concerns that the continuing European crisis would hurt growth prospects.
The People’s Bank of China cut the fixing by 0.18 percent. It stands now at 6.3115 per dollar. The cut was biggest since November 15.
The yuan also dropped as fears of Europe’s crisis deterred traders from buying riskier assets. Zhu Min, the Deputy Managing Director of the International Monetary Fund, expressed a negative outlook for the global economic growth and spoke about increasing downside risks at a conference in Singapore today.
USD/CNY rose from 6.2990 to 6.3092 as of 15:49 GMT today.
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Earlier News About the Chinese Yuan:
Euro has plummeted below the 1.28 level against the US dollar today as concerns pile up. The latest French bond auction saw higher borrowing costs, and there are renewed concerns about a credit rating downgrade for country. On top of that, Italian banking weakness remains.
Yesterday, UK pound gained solidly against the euro, but today some of those gains are being given back. UK pound is lower on a combination of risk aversion, as well as concerns as British politicians consider the effects of British isolation from the rest of the eurozone.
The Chilean peso rallied after inflation jumped more than was forecast by economists, reducing probability of an interest rate cut by the nation’s central bank.
Aussie is down against the US dollar as risk aversion continues today, but up against the euro. Concerns about the eurozone crisis have sharpened, and that has investors and Forex traders alike jumpy about what could be next for the global economy. As a result, the Australian dollar is seeing gains against a weaker euro, but losses against the greenback, which is used as a safe haven.
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The US dollar rallied yesterday as macroeconomic data from the United States was good, while concerns about Europe’s economy persisted. The rally stalled today, but may yet resume as US non-farm payrolls are expected to show robust growth of employment.
Bank capitalization concerns are the main focus today, especially after the debacle involving UniCredit. Worries about bank capitalization, and a continuation of the sovereign debt crisis in many eurozone states, has the euro heading lower again today.
The Canadian dollar fell yesterday and extended its drop today after crude oil declined, while unemployment in Canada unexpectedly increased last month and employment growth was lower than anticipated.
The Czech koruna declined today to the lowest level since July 2010 after minutes of a central bank’s policy meeting showed that policy makers anticipated slower economic growth in the country.
The Great Britain pound jumped against the euro to the highest level in more than a year as concerns about the problems of Europe made the UK currency more appealing. The sterling also advanced versus the Swiss franc, but dropped against the US dollar.