(Bloomberg) -- China’s yuan halted its nine-day losing streak after the central bank set the daily fixing stronger than expected.
The yuan was up 0.06% at 7.1579 per dollar as of 12:15 p.m. in Shanghai. The People’s Bank of China set its reference rate at 7.0835, compared with the 7.1126 average forecast by traders and analysts in a Bloomberg survey.
The Chinese currency has plummeted 3.9% in August, set for the biggest monthly drop on record, as the escalating trade war with the U.S. and a slowing economy damaged investor confidence. The fixing has been set stronger than expected for six straight days, a sign the PBOC is leaning more on the so-called counter-cyclical factor when it sets the rate.
"It’s clear as day the PBOC are beefing up the counter-cyclical measure to avoid at all cost any negative fallout" from the trade dispute, said Stephen Innes, managing director at VM Markets Ltd. in Singapore. "It’s also clear that they are not willing to let the yuan depreciate too fast, which is mildly supportive for risk assets. A rapidly depreciating yuan could trigger a wave of capital outflows."
In a sign that investors are growing increasingly bearish despite the PBOC’s efforts to sooth nerves, the onshore yuan has closed weaker than the fixing on all but one day this month. The currency isn’t only tumbling against the dollar, as a basket measuring the yuan’s performance against 24 exchange rates slipped to a new record low on Wednesday.
Analysts are rushing to cut forecasts for the yuan this week, with Goldman Sachs Group Inc (NYSE:GS). predicting a drop to 7.2 in three months and Bank of America Merrill Lynch (NYSE:BAC) foreseeing a decline to 7.5 by year-end.
Here’s a look at the banks’ forecasts: