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Investing.com - The dollar fell sharply against the yen on Monday, reversing Friday’s rally as shares in China dropped after the country’s central bank guided the currency lower, prompting fresh concerns over the world’s number-two economy. USD/JPY was down 0.92% at 112.94, off Friday’s one-week highs of 114.00. The People’s Bank of China guided the yuan lower for the fifth straight session on Monday, sending the currency to its lowest level in three weeks. At a weekend G20 meeting in Shanghai, PBOC head Zhou Xiaochuan tried to ease concerns that China’s economic strategy hinges on a weaker yuan, saying there is no basis for a persistent depreciation in the currency. The moves by Beijing to weaken the yuan have prompted concerns over a China-led slowdown in global growth. The safe-haven yen also found support after the G20 meeting ended without any concrete measures to get the global economy back on track after a rocky start to the year. The euro was trading near three-week lows against the dollar, with EUR/USD at 1.0923. The euro zone was to release preliminary data on inflation later in the day, which would be closely watched amid mounting expectations for fresh stimulus measures from the European Central Bank at its next meeting in March. The single currency was down against the yen, with EUR/JPY falling 1.13% to 122.99, not far from the three-year trough of 122.44 set last Wednesday. Meanwhile, the pound was struggling at seven-year lows, with GBP/USD at 1.3876 as uncertainty over the U.K.’s future in the European Union. A referendum is due to be held on June 23 for Britain to decide whether to stay in the bloc. The U.S. dollar index, which measures the greenback’s strength against a trade-weighted basket of six major currencies, was holding below last week’s three-week peaks at 98.08. The index ended the week with gains of 1.63%, its best weekly performance since November, after broadly upbeat U.S. economic reports fueled speculation that the Federal Reserve may raise interest rates again this year. Data on Friday showed that while the U.S. economy slowed in the fourth quarter, the pace of the slowdown was not as steep as initially estimated. Separate reports, showing consumer spending and inflation rose in January added to the view that the U.S. recovery is on track.
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