Investing.com – The yuan weakened on Friday as the Chinese currency looks set to record a seventh weekly drop, its longest slide since 2015. Meanwhile, the U.S. dollar also slipped on Friday.
The USD/CNY pair gained 0.14% to 6.8030 by 12:40AM ET (04:40 GMT). The yuan declined almost 6% since early June as traders concerned that authorities would refrain from heavy intervention to stem the yuan’s plunge as long as there is no sign of speculative short trades.
Some analysts believed Chinese authorities might prefer a weaker currency to offset the impact of a trade war with the U.S.
The yuan’s slump on a trade-weighted basis will offset the drag on Chinese growth from the first two rounds of tariffs imposed by the U.S., Goldman Sachs Group (NYSE:GS) said.
"Investors understand that the People’s Bank of China doesn’t plan to intervene and have gotten used to higher two-way volatility," said Ken Cheung, senior Asian currency strategist at Mizuho Bank Ltd.
Meanwhile, the U.S. Dollar Index, which tracks the greenback against a basket of other currencies, also slipped 0.06% to 94.51 ahead of the second-quarter GDP report due later in the day. U.S. President Donald Trump expressed earlier this week his displeasure over the currency’s strength.
The USD/JPY gained 0.13% against the dollar on Friday amid speculation that the Bank of Japan could scale back its monetary stimulus program soon.
Elsewhere, the AUD/USD pair was 0.12% to 0.7387.