TheJakartaPost
Please Update your browser
Your browser is out of date, and may not be compatible with our website. A list of the most popular web browsers can be found below.
Just click on the icons to get to the download page.
Dollar firm, yuan slides after China unexpectedly cuts rates
Change Size
Police officers stand guard in front of the headquarters of the People's Bank of China (PBOC), China's central bank, in Beijing on Sept. 30, 2022. (Reuters/Tingshu Wang)
T
he safe-haven dollar stayed firm against major peers while the yuan sank to a nine-month trough after China's central bank unexpectedly cut key policy rates for a second time in three months on Tuesday to shore up the country's sputtering economy.
The yuan weakened as far as 7.3115 per dollar for the first time since Nov. 4 in offshore trading, before bouncing back as major state-owned banks were seen selling dollars to support the local currency.
The dollar index, which measures the currency against six major peers including the euro and yen, was about flat at 103.13 after hitting a 1 1/2-month high at 103.46 on Monday, buoyed by demand for the safest assets following a spate of disappointing Chinese economic indicators.
Chinese data on industrial output and retail sales released shortly after the PBOC's rate cut also fell short of economists' forecasts.
The Australian dollar, which often acts as a proxy trade on China, dipped as much as 0.39 percent to $0.6463 but failed to breach Monday's nine-month low of $0.6454. It last sat 0.13 percent weaker at $0.6479.
In addition to the burden from China's economic troubles, minutes from the Reserve Bank of Australia's latest meeting released on Tuesday suggested local rates may have already peaked, while soft wages growth also bolstered the case for a pause.
"We're fast approaching a phase where bets will be on for another round of stimulus" in China, said Matt Simpson, senior market analyst at City Index.
"There's a floor under [the Aussie dollar], and any rumors of stimulus could light the bullish match for these markets to bounce."
Elsewhere, the US dollar pushed to a fresh nine-month high of 145.60 yen before retreating to be down 0.09 percent at 145.435.
Traders are looking for any signs of intervention, after the dollar's surge above 145 last autumn triggered the first yen buying intervention in a generation.
