HONG KONG: Chinese yuan edged lower against the US dollar on Friday and was on track to post its first weekly decline in a month, as weak export data weighed on sentiment.
China’s exports unexpectedly shrank in October, falling 1.1% from a year earlier in dollar value terms, missing a forecast of 3.0% year-on-year growth.
Imports grew 1.0%, customs data showed on Friday, also falling short of a 3.2% forecast.
The yuan was 0.05% lower at 7.1225 to the dollar by 0314 GMT, following a two-day gain. The currency weakened 0.04% this week, following a three-week appreciation streak.
Its offshore counterpart traded at 7.1259 yuan per dollar , down about 0.06% in Asian trade.
“The exporters in China have been front-loading their trade in order to avoid high tariffs in the US. It seems the front-loading finally faded in October,” said Zhiwei Zhang, president and chief economist at Pinpoint Asset Management, noting a US-Sino trade deal late last month to de-escalate tensions and scaleback ultra-high tariffs may take some pressure off shipments in coming months.
“I don’t think the trade weakness will make the yuan much weaker. It will probably stay stable or even rise slightly” as the currency is still being driven by the dollar’s moves, he added.
Prior to the market opening, the People’s Bank of China set the midpoint rate at 7.0836 per dollar, its strongest since Oct 15, 2024 and 295 pips firmer than a Reuters’ estimate.
The central bank has been steadily strengthening its daily yuan official guidance since late April, suggesting it is allowing some mild appreciation, traders and analysts said.
The spot yuan is allowed to trade 2% either side of the fixed midpoint each day.
The dollar retreated in early Asia trade on Friday, leading declines among major currencies as investors lacking official data on the US labour market seized upon signs of weakness in private sector surveys.
The dollar index =USD, which measures the greenback’s strength against a basket of six currencies, fell 0.5% to 99.674 as traders ramped up bets again on a US rate cut on December 10.
“The US dollar is likely to show further weakness, and Federal Reserve rate cuts will drive down of China-US interest rate differentials, supporting the moderate appreciation of the yuan,” analysts at CICC wrote in a note.
Market risk appetite should stay strong with tariff risks easing following the trade truce and the Shanghai Composite Index near decade-highs, which should continue support the Chinese currency, they added.
American Dollar Exchange Rate