SHANGHAI: China's yuan fell on Friday as companies' demand for dollars surged at month-end, with the currency on course for its first monthly decline in seven months.
By midday, spot yuan was at 6.1479 per dollar, its lowest level in two months, and 0.14 per cent weaker than Thursday's close of 6.1392.
The People's Bank of China ( PBOC) fixed the yuan's daily midpoint at 6.1345 per dollar, down 0.04 per cent from previous fix.
"The dollar purchase outweighs sales today, partly due to seasonal high demand from companies, especially from oil companies," said a trader at a European bank in Shanghai.
Chinese oil firms - mainly PetroChina and Sinopec Corp - are primary dollar buyers on the domestic market given that the oil trade is conducted mostly in dollars.
"But the pessimistic sentiment towards the yuan after the interest rate cut also makes investors tend to keep more dollars on hand," he added, referring to the central bank's surprising easing late last Friday to support the cooling economy.
For the week, the currency looked set for its biggest weekly loss since the week of April 21.
On a monthly basis, the yuan is set to drop 0.6 per cent, ending a six-month rally since May this year, during which the currency appreciated around 2 per cent.
The central bank, however, has set a series of relatively strong midpoint fixings this week, a likely signal that it wants to prevent the currency from a sharp depreciation.
Traders expect the yuan will hold steady around 6.11-6.15 level until the end of this year.
original source: http://articles.economictimes.indiatimes.com/2014-11-28/news/56540399_1_daily-midpoint-spot-yuan-chinese-oil-firms