SHANGHAI, Sept 15 (Reuters) - China's yuan climbed to its strongest in two weeks against the dollar in early trade on Friday after the release of better-than-expected August economic activity data.
The onshore yuan strengthened to as high as 7.24 per dollar, - its strongest since Sept. 1 - after August industrial output and retail sales growth beat expectations.
Previously, the yuan opened at 7.2752 per dollar, little changed from the previous day's close, in muted response to Beijing's fresh monetary easing measures.
The People's Bank of China (PBOC) on Friday cut banks' reserve requirement ratio (RRR) - the amount of cash that banks must hold as reserves - by 25 basis points.
It also rolled over maturing medium-term policy loans while keeping the interest rate unchanged on Friday, focusing on
boosting liquidity
in the financial system following a similar move the previous day.
Both steps to ease monetary conditions should provide some succour for an economy whose stuttering performance had made investors turn away.
China's yuan has depreciated steadily since February as the faltering post-pandemic economy and widening yield gap with other economies, particularly the United States, affected capital flows and trade.
Its rapid decline has prompted authorities to roll out a slew of measures to contain the weakness, but some analysts expect the downtrend to continue.
"In our view, RMB would remain an attractive funding currency for carry trades with a managed and gradual depreciation against USD," Goldman Sachs said in a note on Friday.
"The RMB weakness has been ultimately driven by the wide US-China interest rate differentials and sluggish Chinese economic growth," Goldman said, expecting more yuan stabilisation efforts by Chinese authorities. (Reporting by Shanghai newsroom; Editing by Simon Cameron-Moore)
