Chinese Yuan Weakens in Cautious Mood

The offshore yuan weakened to around 7.3 per dollar, retreating from two-week highs as caution dominated sentiment ahead of key central bank events this week, with the US Federal Reserve, the Bank of England and Bank of Japan all set to decide on monetary policy.

The People’s Bank of China is also expected to release its loan prime rate decisions on Friday.

The yuan has come under immense pressure this year due to sluggish economic growth in China and a series of interest rate cuts from the central bank.

The PBOC recently cut the reserve requirement ratio by 25 basis points for all banks to keep ample liquidity and support a nascent economic recovery.

China's central bank has also responded to the currency’s weakness by lowering the foreign exchange reserve requirement ratio by 200 basis points to 4% beginning on September 15, the first such reduction this year.