Chinese Yuan Weakens On Discouraging Data

Published on Jul 17, 2023 11:30

Weak data from China added pressure on the yuan that led losses against the dollar on Monday. Risk sentiments deteriorated after a weak string of Chinese data added to concerns of recovery in the world`s largest consumer. The Chinese economy grew by 0.8 percent on a seasonally adjusted basis in the three months to June of 2023, much softer than a 2.2 percent expansion in the prior period. Retail sales increased 3.1% from the prior year in June 2023, slowing sharply from a 12.7% surge in May while unemployment rate stayed unchanged near 16-month lows. The industrial capacity utilization rate in China fell to 74.5 percent in the second quarter of 2023 from 75.81 percent in the same period a year earlier. USDCNY was trading up 0.4% at 7.17. Meanwhile, the People`s Bank of China today injected 103 billion yuan ($14.42 billion) of liquidity via the one-year medium-term lending facility at an interest rate of 2.65%. It also provided CNY33 billion of funds through seven-day reverse repurchase agreements at an interest rate of 1.90%. The dollar index, in the meantime, witnessed a mild recovery overseas after registering sharp losses during the last one and half weeks, further weighing the Chinese currency. The dollar index is currently steadying around 99.63 levels.