China’s yuan fell on Friday but remained on track for its most significant weekly gain in a year, interrupting a six-week losing streak and tracking broad dollar weakness in global markets.

There was little reaction to China’s considerable decrease in its benchmark reference rate for mortgages on Friday. Beijing strives to revive the struggling housing sector and stimulate the cooling economy.

The People’s Bank of China (PBOC) fixed the midpoint rate CNY=PBOC before market opening at 6.7487 per dollar; 37 basis points higher than the previous fix of 6.7524.

The onshore yuan CNY=CFXS dropped from an overnight high of 6.7095 per dollar to trade at 6.7274 at lunchtime, 167 pips or 0.25 per cent lower than the previous session.

If it closed the late-night session at the lunchtime level, it would have gained 0.93 per cent versus the dollar this week; the most since late May 2021. Traders ascribed the strength to the recent depreciation of the US currency.

The dollar index =USD, which measures the greenback against six major rivals, fell 1.5 per cent for the week to 102.96, pulled down by a drop in Treasury yields and exhaustion following the currency’s breathless 10%, 14-week run.

Since late April, the yuan has dropped more than 6%; representing quick and significant losses for a currency historically closely regulated and fluctuating in narrow bands.

However, currency traders believe corporate dividend payments could arrive shortly, capping this week’s advances.

Offshore-listed Chinese enterprises typically have to acquire dollars to pay abroad shareholders from June through August. Such demand could put downward pressure on the yuan. Widespread COVID-19 lockdowns in various places, including Shanghai, have caused some of those transactions to be delayed.

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