China sets yuan fix at biggest gap to estimate on record

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China has made the biggest defense of its beleaguered currency via fixing on record.

The yuan is allowed to trade in a 2% band relative to the daily fixing each day. The People’s Bank of China on Friday set that fixing at one dollar equalling 7.2006 yuan — compared to the average Reuters estimate of 7.305 yuan. That’s the largest gap compared to the estimate since the Reuters poll started in 2018, according to ING analysts.

The onshore yuan
USDCNY,
+0.13%
on Wednesday fell to a 16-year low, with a dollar reaching 7.2981 yuan. On Friday, it was slightly stronger, with one dollar fetching 7.2895 onshore yuan.

The onshore yuan refers to the market for the currency in mainland China, while the offshore yuan refers to the market for the Chinese currency outside the mainland, like in Hong Kong.

The offshore yuan
USDCNH,
+0.09%
continued to weaken, as the dollar rose 0.1% to 7.3106 yuan.

Concerns are mounting on China’s economy, namely via the property sector, as Evergrande filed for bankruptcy protection in the U.S.

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