Disappointing Chinese economic data this week is feeding through to the currency market, weakening the yuan toward the key psychological 7-per-dollar level.
(Bloomberg) — Disappointing Chinese economic data this week is feeding through to the currency market, weakening the yuan toward the key psychological 7-per-dollar level.
The offshore yuan traded around 6.9962 per dollar Wednesday, its weakest level this year, after falling 0.6% Tuesday. A breach of 7 would be the first since Dec. 28.
China’s industrial output, retail sales and fixed investment grew at a much slower pace than expected in April, prompting calls for more policy stimulus to bolster growth. A climb in Treasury yields, helped in part by positive data on the US housing sector, also aided the dollar.
“The Chinese currency is expected to weaken due to both data weakness and easing monetary policy,” Hao Zhou, chief economist at Guotai Junan Hong Kong Ltd, wrote in a note. “A breach above the 7 hurdle looks possible in the short term.”
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