SHANGHAI (Reuters) – China‘s yuan touched a near 10-month low on Tuesday morning as it extended its link to the ailing euro, but perked up midday following better-than-expected factory output data.
The central bank set its daily midpoint at 6.3339 per dollar on Tuesday, its weakest level in 2012, after the euro hit another two-year low on Monday.
The yuan touched 6.3930 in the first hour of trade, 66 pips weaker than Monday’s close and the weakest level since late September 2011.
But the market was buoyed later in the morning by the release of a survey showing that China’s manufacturing output grew at its fastest pace in nine months.
The yuan closed at 6.3858 per dollar, 8 pips stronger than Monday’s close.
The HSBC Flash China manufacturing purchasing managers index (PMI) rose to 49.5 in July from 48.2 in June, putting it close to the 50 level that divides expansion from contraction. The increase was driven by a jump in the output sub-index to 51.2 — the best showing since October 2011.
Bargain hunting was also a likely factor in the yuan’s late morning bounce.
“Some companies saw the rate rise above 6.39 and decided to jump in,” said a trader at a European