China’s Offshore Yuan Shows Small Drop After Slump in PMI

(Bloomberg) -- China's currency weakened slightly at the start of trading after data showed a gauge of the nation's factory output fell to the lowest level on record.

The offshore yuan fell 0.2% to 6.9928 per dollar at 4:38 a.m. Hong Kong time. Technical resistance is at 7.0572, which it touched on Feb. 21.

The decline was modest relative to sharp drops in the Australian and New Zealand currencies in early Asia trading. The dollar fell 0.6% against the yen as the Japanese currency rose on haven demand.

The manufacturing purchasing managers' index plunged to 35.7 in February from 50 the previous month, according to data released by the National Bureau of Statistics on Saturday, much lower than the median estimate of economists. The non-manufacturing gauge also fell to its lowest ever, 29.6. Both were well below 50, which denotes contraction.

The worse-than-expected figures are fueling concern over the scale of the disruption to the world's second-largest economy caused by the deadly coronavirus, and how long it will take for manufacturing activity to return to normal. China's CSI 300 Index of stocks slumped 3.6% on Friday as optimism faded after a $1 trillion stock rally.

The onshore yuan has been resilient to shocks so far. The currency has weakened 0.4% against the greenback this year. The onshore yuan starts trading at 9:30 a.m. in Shanghai.

To contact the reporter on this story: Richard Frost in Hong Kong at rfrost4@bloomberg.net

To contact the editor responsible for this story: Sofia Horta e Costa at shortaecosta@bloomberg.net

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