(Bloomberg) -- China moved to support the under-pressure yuan for a second day, through its daily reference rate for the managed currency.
The People’s Bank of China set the so-called yuan fixing at 7.1966 per dollar, about 359 pips stronger than the average estimate in a Bloomberg survey. On Wednesday, the gap between the fixing and estimate was 445 pips, the widest since early August.
The yuan has come under pressure alongside global peers as Donald Trump’s US election victory bolstered the dollar to its highest in two years. Concern that his administration would impose 60% tariffs on Chinese goods, potentially decimating Sino-US trade is also weighing on the currency.
Before Wednesday, the PBOC had largely refrained from sending any strong signals in support of the yuan, allowing it to weaken alongside its global counterparts. More than half of the respondents in a Bloomberg survey had said Beijing may weaken the yuan to make Chinese exports more competitive and help offset some of the potential tariff impact.
The fixing, which limits moves in the onshore yuan by 2% on either side, is PBOC’s most frequently-used tool to manage the currency.
“I don’t believe the PBOC draws a line in the sand,” said Kiyong Seong, lead Asia macro strategist at Societe Generale in Hong Kong. “It’s more about the pace rather than the level.”
The offshore yuan briefly edged up 0.1% after the fixing before turning little changed on the day around the 7.2485 per dollar level. It has weakened about 1.8% so far this month.
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