We calculate the screening charge density distribution due to a point charge,
such as that of a positive muon (μ+), placed between the planes of a
highly anisotropic layered metal. In underdoped hole cuprates the screening
charge converts the charge density in the metallic-plane unit cells in the
vicinity of the μ+ to nearly its value in the insulating state. The
current-loop ordered state observed by polarized neutron diffraction then
vanishes in such cells, and also in nearby cells over a distance of order the
intrinsic correlation length of the loop-ordered state. This in turn strongly
suppresses the loop-current field at the μ+ site. We estimate this
suppressed field in underdoped YBa2Cu3O6+x and
La2−xSrxCuO4, and find consistency with the observed 0.2--0.3 G
field in the former case and the observed upper bound of ∼0.2 G in the
latter case. This resolves the controversy between the neutron diffraction and
μSR experiments. The screening calculation also has relevance for the
effect of other charge impurities in the cuprates, such as the dopants
themselves