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China's yuan edged higher on Monday but stayed within sight of last week's near-six year low against the dollar as investors worried that improved economic activity in the June quarter was a blip with weakness likely in coming months.
The spot market opened at 6.6830 per dollar and was changing hands at 6.6774 at midday, 0.12 per cent away from the midpoint of 6.6860 per dollar, and weaker than Friday's setting of 6.6669.
On July 18, the yuan hit 6.7030 per dollar, its lowest level since September 2010.
The spot rate is currently allowed to trade within a range 2 per cent above or below the official fixing on any given day.
Economic growth expanded slightly faster than expected in the second quarter, with a pick-up in retail sales and greater consumption. But analyst warned that large swaths of the economy still face pressure.
"Our broad China macro views have not changed: we expect growth to decelerate in the second half as the credit and fiscal boost wanes, and continue to think that risks are tilted towards lower policy rates and further yuan depreciation,” Goldman Sachs strategists wrote in a note on Monday.
Yuan weakness bets rose after the conclusion of the two-day meeting by G20 finance ministers in China where countries pledged to work to support global growth and a general agreement to refrain from competitive currency devaluations, indicating that recent Chinese currency market moves were broadly acceptable.
The Thomson Reuters/HKEX Global CNH index, which tracks the offshore yuan against a basket of currencies on a daily basis, stood at 96.10, slightly higher than Friday's close of 96.07.
The global dollar index rose to 97.384 compared with 97.47 at the previous close.
The offshore yuan was trading at 6.6876 per dollar, slightly weaker than the onshore rate.
Offshore one-year non-deliverable forwards contracts (NDFs), considered the best available proxy for forward-looking market expectations of the yuan's value, traded at 2.45 percent weaker from the midpoint.
One-year NDFs are settled against the midpoint, not the spot rate.
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