The Chinese yuan shed 0.3 per cent as data released over the weekend showed the country remained in disinflation for a second successive month, with CPI inflation declining at its fastest pace in three years
Most Asian currencies dropped on Monday, with the Chinese yuan among the worst performers after data pointed to a sustained deflationary trend in the country, while the dollar stabilised in anticipation of a Federal Reserve meeting.
The dollar saw some strength on Friday after a stronger-than-expected nonfarm payrolls data, which dented expectations for an early interest rate cut by the Federal Reserve. The central bank is broadly expected to keep rates on hold this week, although its signals for 2024 will be in close focus.
The Chinese yuan shed 0.3 per cent as data released over the weekend showed the country remained in disinflation for a second successive month, with consumer price index (CPI) inflation declining at its fastest pace in three years.
The reading ramped up concerns over a Chinese economic slowdown, as it came shortly after several middling data prints for November.
Steeper losses in the yuan were held back by a stronger daily midpoint fix from the country’s central bank. But sentiment towards the currency remained dour, and it seemed set to test the 7.2 level once again.
Focus this week is on Chinese industrial production, fixed asset investment and retail sales data for November, due on Friday.
Concerns over China weighed on wider Asian currencies. The Australian dollar dropped 0.2 per cent on its high trade exposure to China, while the South Korean won and Singapore dollar shed 0.2 per cent and 0.1 per cent, respectively.
The Japanese yen dropped 0.3 per cent, but traded near four-month highs reached last week after a slew of hawkish signals from the Bank of Japan. But the Bank of Japan is still expected to keep policy ultra-loose in the near-term.
The dollar index and dollar index futures both increased slightly in Asian trade, after marking some gains on Friday.
