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Bloomberg
China’s yuan extended losses in early trading to tumble to the weakest level since 2010, pulled down by cooling property prices, a dollar rebounding on haven demand and a weaker central bank fixing.
New home prices rose in fewer cities in June compared with a month earlier, official data showed on Monday, raising concern that a real estate-supported economic recovery may be losing steam. China’s monetary authority earlier weakened the yuan’s daily fixing to the lowest since October 2010 after the dollar strengthened Friday following a coup attempt in Turkey.
The greenback was boosted on Monday also as China said it would hold military exercises in the South China Sea.
“The dollar strengthened as orders to buy the currency jumped, pressuring the yuan and the rest of Asian currencies lower,” said Andy Ji, a Singapore-based foreign-exchange strategist at Commonwealth Bank of Australia. “There’s news that China will hold military exercise in South China Sea later this month” which could spur some haven-demand for the greenback.
The yuan fell 0.16 percent to 6.6987 per dollar as in Shanghai, according to National Interbank Funding Center prices. It dropped to 6.6998 earlier, the weakest since November 2010. The currency traded in Hong Kong’s offshore market pared an early gain to trade little changed.
A replica of the CFETS RMB Index, which tracks the yuan against 13 currencies, rose to 94.47, the highest since July 5. The trade-weighted gauge posted its first weekly advance since the end of May last week.
China’s announcement of military drills to be held July 19-21 comes after the Permanent Court of Arbitration last week ruled that the nation’s island-building and other efforts to assert control over disputed waters had “aggravated” tensions.