China's yuan is sliding and market participants suspect authorities are deliberately but slowly engineering a light depreciation of the currency, both to complement an easy monetary policy and to support exports. While the yuan has declined roughly 2% this year against the dollar, it has become relatively less competitive as Japan's yen and currencies of other neighbours South Korea, Thailand and Taiwan drop more sharply. The People's Bank of China (PBOC) also appears to have loosened its grip on the yuan, allowing it to fall to the weak side of the 7.2-per-dollar level that state-owned banks had staunchly defended in the past, though it has continued to lend some support through stronger-than-expected settings of the daily mid-point for the currency.
The People’s Bank of China (PBoC) set the USD/CNY central rate for the trading session ahead on Monday at 7.0996 as compared to the previous day's fix of 7.1004 and 7.2267 Reuters estimates.
China’s longer-term benchmark lending rate was lowered this month after the central bank held its policy rates steady, according to data released by the People’s Bank of China.
Officials in China have struggled to kickstart economic growth as they battle a range of headwinds, including a prolonged property-sector crisis, soaring youth unemployment and a global slowdown that has hammered demand for Chinese goods.