Yuan weakens amid mild inflation, going against stronger central bank direction
Yuan Weakens Despite Central Bank’s Strong Guidance
On Wednesday, the Chinese yuan declined against the US dollar, even as the central bank issued its strongest daily reference rate in three years. The currency’s movement came amid weaker-than-anticipated consumer inflation data and the central bank’s continued commitment to an accommodative monetary policy, fueling expectations of further easing.
In January, consumer price growth slowed while factory prices remained in deflation, prompting renewed calls from the market for additional policy actions to address ongoing imbalances between supply and demand. The yuan began trading at 6.9120 per dollar and was last seen at 6.9154 as of 0157 GMT, marking a drop of 14 pips from the previous session’s close. The People’s Bank of China reiterated on Tuesday its intention to maintain a “moderately” supportive policy approach.
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