The offshore yuan weakened to around 7.26 per dollar, reversing the previous session's gains as investors reacted to disappointing PMI data.
Yuan weakens on PMI data, US dollar strength
Official figures showed that China's factory activity unexpectedly contracted in January, falling to 49.1, below the 50.1 forecast, while services activity slowed sharply to 50.2, down from a 9-month high of 52.2 in December. Additionally, industrial profits declined for the third consecutive year in 2024, though they saw an 11% year-on-year increase in December. Externally, the yuan faced additional pressure from a stronger US dollar, fueled by tariff concerns and expectations of steady Federal Reserve rates.
China introduces measures to boost ETF growth
On a more positive note, China introduced new measures on Sunday to boost the growth of equity and bond ETFs to support its struggling stock market. The China Securities Regulatory Commission (CSRC) outlined plans to significantly expand the scale and proportion of index investments in the capital market over time.
