China yuan hits 16-month low against dollar

SHANGHAI, Apr 23 (AFP) : China's yuan currency extended its downtrend against the dollar Wednesday to hit a 16-month low, despite the country's central bank fixing its trading point for the unit at a higher level.

The unit fell to as low as 6.2458 to the dollar in the morning, its weakest level since December 2012. That compared with Tuesday's close of 6.2370, according to the China Foreign Exchange Trade System.

However, the People's Bank of China had set the mid-point for trading at 6.1599, compared with 6.1610 on Tuesday. The PBoC keeps a grip on the currency but allows it to move up or down two per cent on either side of a daily-set point.

The yuan has fallen repeatedly in recent months, with many dealers believing the depreciation is a deliberate move by the central bank to target speculative funds betting on continued rises. But traders have also blamed the slowing economy as a crucial factor.

However, a Shanghai-based local bank trader told Dow Jones Newswires: "This round of yuan falls are mainly driven by investors spontaneously purchasing dollars instead of the central bank's intervention, so we may see it slowly weakening towards 6.26 in the coming weeks."