Yuan-Dollar Parity Rate Makes Biggest Climb in Two Weeks; Greenback Sinks to 10-Month Low
Xu Wei
/SOURCE : Yicai
Yuan-Dollar Parity Rate Makes Biggest Climb in Two Weeks; Greenback Sinks to 10-Month Low

(Yicai Global) July 17 -- The yuan's central parity rate against the dollar climbed 212 points on Monday to reach 6.7562, the largest increase in two weeks, the China Foreign Exchange Trading System said.

The rate officially closed at 6.7842 on July 16 and the night-closing figure was 6.7741.

The currency's appreciation against the greenback can be attributed to a sharp decline of the dollar against other major world currencies, with the dollar hitting a 10-month low on Monday. The euro closed in on its previous high, set in May 2016, while the pound stood at its highest point since September, which jumped 1.2 percent on Friday to register the largest single-day increase in three months. The pound's latest figure against the dollar was 1.3107.

Last week, the US Federal Reserve was looking likely to make its third rate hike this year, but the release of lower-than-expected figures for retail sales and inflation has put a dampener on the rise.

A report released by the US Department of Commerce on July 14 showed the seasonally adjusted total retail sales of consumer goods in the country was nearly USD474 billion last month, down 0.2 percent from a month earlier against an anticipated 0.1 percent growth.

Growth in the consumer price index remained flat at 1.6 percent, despite expectations of a 0.1 percent rise. In June, the core CPI grew 0.1 percent on the month, just half of the anticipated growth. It rose 1.7 percent compared with figures from a year earlier.

"The Fed is tasked with achieving maximum sustainable employment and stable prices," the Wall Street Journal reported. "With unemployment at 4.4% in June, it appears the Fed has closed in on one half of its mandate. Inflation, however, is well shy of its target."

The poor performance in both CPI and retail figures, coupled with other recently-released economic data, show the US struggled to shake off a weak first quarter this year.

The Fed's plan to progressively hike rates depends upon a 2-percent target for inflation. After CPI growth missed expectations for four straight months, traders' expectations for another hike this year cooled down.

Federal Funds 30 Day Futures implied the probability of another increase before December is 50-50, down 9 percent after the non-agricultural report was released in June. It also suggested there would only be two hikes next year, just half of the four anticipated.

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Keywords: Forex , Yuan , Dollar , US