Dollar falls below Rmb6.40 for first time since 2015

Bad times for the US dollar.

The greenback declined on Friday against the yuan, reaching its weakest point in more than two years against China’s currency amid a broad fall for the buck.

The dollar fell as low as Rmb6.3876 per yuan on the onshore market, according to Reuters data. It has not traded below Rmb6.40 since December 7, 2015. The currency is down 6.9 per cent over the past 12 months.

In a note on Thursday, Morgan Stanley analysts said that China is keen for the yuan to be used more broadly for international trade, a factor that may put further pressure on the dollar.

Friday’s fall was not limited to the yuan: the dollar index, a measure of the dollar against six developed market currencies, was down 0.22 per cent in recent trade at 90.33.

The spectre of a potential US federal government shutdown that would begin on Friday evening Washington time has placed pressure on the dollar.

“The fear that the lack of agreement could force a closure of the US government may be providing the latest fodder for what is a trend move,” said Marc Chandler, currencies strategist at Brown Brothers Harriman.

The US House of Representatives passed a stopgap funding measure on Thursday, however, the bill faces hurdles in the Senate where Democrats have a greater ability to block its passage. Anxiety has grown after US President Donald Trump dispatched a tweet that caused confusion over a provision that was a key point of compromise between Democrats and Republicans.

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