(Bloomberg) — The yuan slid past the key level of 7 per dollar for the first time this year in a further sign the recovery of the world’s second-largest economy from its Covid restrictions is grinding to a halt.
The currency weakened past the key threshold in both onshore and offshore trading after data this week showed factory output, retail sales and fixed-asset investment all grew at a slower pace in April than economists forecast. The nation’s benchmark stock gauges are trailing their major Asian peers this quarter, while sovereign bonds have rallied on expectations of more easing.
“We had thought that stronger sentiment thanks to China’s abrupt reopening and the subsequent improvement in some economic data points would strengthen the yuan, but this has not materialized,” said Kiyong Seong, lead Asia macro strategist at Societe Generale Hong Kong Branch. “The threshold for market players to position for a stronger yuan turned out to be much higher than we expected.”
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