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Yuan slides post China GDP

SHANGHAI, Oct 19 (Reuters) – China’s Yuan eased against the U.S. dollar on Thursday morning after slightly slower economic growth in the third quarter, while strong corporate demand for the greenback piled additional pressure on the Chinese currency.

China’s economy grew 6.8 percent in July-September period from a year earlier, in line with Market expectations and slightly slower than the second quarter. But the outcome was at odds with the central bank governor Zhou Xiaochuan’s more optimistic growth outlook on Sunday, when he said gross domestic product could grow 7 percent in the second half of this year. “With the China GDP coming in on consensus, whatever bullish sentiment the markets were positioned for…after Zhou Xiaochuan’s comment earlier this week that the economy could grow 7 percent in the second half of the year, should get priced out quickly,” Stephen Innes, head of Trading Asia-Pacific at OANDA said in a research note.

Prior to market open, the People’s Bank of China (PBOC) lowered its midpoint for the third straight day to 6.6093 per dollar, below the key psychologically important 6.6 per dollar for the first time since Oct.10.

Thursday’s official guidance rate was 102 pips or 0.15 percent weaker than the previous fix of 6.5991 on Wednesday. Traders said Thursday’s official guidance largely matched their forecasts.

In the spot market, the onshore yuan opened at 6.6290 per dollar, fell to a low of 6.6390 before changing hands at 6.6317 at midday, 46 pips weaker than the previous late session close and 0.34 percent softer than the midpoint.

Its offshore counterpart also followed the trend. As of midday, the offshore yuan was trading 0.05 percent weaker than the onshore spot at 6.6353 per dollar.

Traders said spot yuan fell further on rising corporate demand for the greenback as some companies usually need to purchase dollars for their financing needs in the middle of the month.

Nasdaq News via Reuters

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Yuan slides post China GDP


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