(Bloomberg) -- China's yuan spent less than two days on the strong side of 7 as optimism over trade talks faded.
The onshore yuan weakened the most in five weeks Thursday, sliding to as low as 7.02 a dollar and ending a seven-session rally that was its best run since January. The move came after news that U.S. and China may not be able to sign a partial deal until December, later than previously expected.
China Analysts Already Calling Time on Yuan's Surge Past 7
Optimism about an interim trade agreement and a weaker greenback sent the currency to overbought territory this week for the first time in nine months. China has reported the slowest economic growth since the early 1990s -- a factor that may prompt Beijing to loosen monetary policy more aggressively and weaken its currency to blunt the impact of the trade war.
“We wouldn't get too excited about the yuan,” said Dominic Schnider, head of commodities and Asia Pacific foreign-exchange at UBS Global Wealth Management. “The pendulum of trade tensions can shift quickly, and still-weak economic activity in China should result in more central bank easing.”
The onshore yuan fell as much as 0.32% before paring the drop to 0.26% at 7.0157 as of 2:23 p.m. in Shanghai. The offshore rate was little changed at 7.0162.
To contact the reporter on this story: Tian Chen in Hong Kong at tchen259@bloomberg.net
To contact the editors responsible for this story: Sofia Horta e Costa at shortaecosta@bloomberg.net, Philip Glamann
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