Yuan slips on lending rate cut

The yuan fell slightly on Friday after the People's Bank of China (PBOC) set a lower midpoint in response to the dollar hitting a one-month high overnight on global growth concerns. There was lessening expectations of further appreciation in the Chinese currency as more evidence points to a slowdown in the world's second-largest economy and after China, the Eurozone and Britain cut interest rates on Thursday, signalling a growing level of alarm about the health of the world economy. Dealers expect the yuan to meet resistance around the 6.37 per dollar level as the central bank has no intentions of allowing the currency to depreciate excessively by intervening. "The government may focus more on keeping the economy stable for now, so there is little possibility of a sharp rise or fall in the yuan," said a dealer at a Chinese commercial bank in Shanghai. The yuan's outlook will largely depend on developments in the euro zone and other global economic factors affecting the dollar. Market players were also awaiting US jobs data later in the day to set direction on the dollar. Before trading began, the PBOC set its daily midpoint 56 pips weaker at 6.3249 following a rise in the dollar index to a month high. The yuan was at 6.3653 in afternoon trade, 94 pips weaker than Thursday's close. China will release a series of economic data next week, including second-quarter gross domestic product which is expected to be weaker than initially thought, after it surprised markets with a rate cut on Thursday, the second time in a matter of weeks. Offshore, one-year non-deliverable forwards (NDFs) were bid at 6.4018 and offshore deliverables of the same tenor traded at 6.4438 by midday. Offshore spot yuan was at 6.3650 per dollar, near the level of onshore spot yuan. From gulfnews