USD/CNY: Yuan declines for fifth straight week amid PBOC’s inaction

The yuan is headed for a fifth weekly decline against its American peer, the longest run of losses this year on increased expectations that the Chinese central bank could further depreciate the local currency as it seeks to revive economic growth.

The currency is also headed for its biggest weekly drop in a month against a trade-weighted basket of 13 currencies, another sign that the People’s Bank of China (PBOC) is tolerant of further declines, Bloomberg reports.

More so, the nation’s foreign-exchange reserves unexpectedly increased in June, signaling the monetary authority may have reduced intervention to support the yuan. Data released Thursday showed China’s reserves rose more than USD13 billion to USD3.21 trillion last month. 

Meanwhile, the yuan fell 0.33% from July 1 to 6.6842 per dollar in Shanghai, extending its decline over the past five weeks to 2%. The offshore yuan traded in Hong Kong dropped 0.3% for the week, while today’s fall to 6.7011 was largely on the back of ongoing chatter that PBOC may cut RRR today.