Yuan weakens most this month on growth concern

China\'s yuan dropped the most this month as concern growth in Asia\'s largest economy is slowing and Europe\'s debt crisis is worsening damped investor sentiment. Data today is likely to show the Chinese economy grew 9.3 per cent last quarter, the least in almost two years, according to a Bloomberg survey. Twelve-month yuan forwards dropped by the most in four weeks after European finance ministers declined to rule out a temporary default on Greek bonds yesterday, struggling to contain the region\'s debt crisis as bond yields in Italy and Spain surged. Annual Inflation reached a three-year high of 6.4 per cent in June, a July 9 report showed. Article continues below High inflation \"China\'s slowing growth coupled with high inflation has added more concerns as investors are taking money off the table in Asia,\" said Dariusz Kowalczyk, a senior economist at Credit Agricole CIB in Hong Kong. \"Yuan forwards are reacting to the deterioration of sentiment in the global market on disappointing developments in Europe.\" The yuan weakened 0.08 per cent to 6.4722 per dollar in Shanghai, the biggest one-day decline since June 24, according to the China Foreign Exchange Trade System. In Hong Kong\'s offshore market, the yuan fell 0.20 per cent to 6.4780. The People\'s Bank of China set the currency\'s reference rate 0.06 per cent weaker at 6.4748 per dollar yesterday. The yuan isn\'t allowed to trade more than 0.5 per cent on either side of the fixing. Twelve-month non-deliverable forwards declined 0.31 per cent to 6.4165 per dollar, the biggest daily loss since June 9. The contracts were trading at a 0.9 per cent premium to the onshore spot rate. China\'s monetary policy may enter a wait-and-see period as tightening takes effect and growth slows while benchmark interest rates in developed nations remain low, according to a commentary yesterday in the China Securities Journal. Consumer prices may peak in July and \"quickly\" slow in the fourth quarter on declines in commodity prices and strong summer harvests, 21st Century Business Herald reported yesterday, citing Chen Dongqi, deputy head of the National Development and Reform Commission\'s macroeconomic research institute.