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Yuan weakens as corporate FX support fades and growth concerns rise
Commerzbank said Chinese banks’ net client FX sales fell to an eight-month low of USD 25.2 billion in July, signaling slower corporate conversion that had been supporting the yuan.
Commerzbank analysts said China’s July data pointed to softer momentum at the start of Q3, with industrial production and retail sales coming in below market expectations, which left the yuan more exposed to deteriorating sentiment on China’s growth outlook.
They noted that USD/CNY and USD/CNH have edged higher as earlier corporate FX conversion support wanes. The analysts linked the shift to a fall in Chinese banks’ net client FX sales, which halved in July to an eight-month low of USD 25.2 billion.
Commerzbank added that Beijing has called for new incremental fiscal measures. Premier Li Qiang convened a State Council meeting and urged officials to formulate “practical and effective incremental policies” to shore up growth, with fiscal acceleration, including faster bond issuance and front-loaded infrastructure spending, seen as the most likely near-term lever.