16.8 C
New York
Saturday, October 23, 2021

China’s yuan inches up, supported by corporate dollar selling

China’s yuan inches up, supported by corporate dollar selling

SHANGHAI: China’s yuan inched up against the US dollar on Monday on slightly heavier corporate dollar selling and in line with the greenback’s movements in global


The US unit on Monday edged away from last week’s three-month highs, while the euro nursed losses after the European Central Bank and unrest in Spain’s Catalonia led it to post its worst week this year.

The global dollar index, a gauge that measures dollar strength against six other currencies, eased to 94.776 from the previous close of 94.916.

Prior to the market opening on Monday, the People’s Bank of China (PBOC) lowered its official yuan midpoint to 6.6487 per dollar, the weakest level since Oct.9.

Monday’s guidance rate was 14 pips or 0.02 percent softer than the previous fix of 6.6473 per dollar on Friday, and was in line with market forecasts, traders said.

In the spot market, the onshore yuan opened at 6.6458 per dollar and was changing hands at 6.6436 at midday, 79 pips firmer than the previous late session close and 0.08 percent stronger than the midpoint.

Traders said the market participants have not figured out a clear direction for the yuan, with corporate flows expected to be closely followed in the near term.

The yuan weakened around 0.5 percent against the greenback last week, but on a trade-weighted basis it edged up about 0.4 percent against a basket of currencies of trading partners in the same period, according to official data from the China Foreign Exchange Trade System (CFETS).

The index, published on a weekly basis, stood at 95.02 on Friday.

There is little consensus among economists on where the yuan will end its rollercoaster year.

It had gained 7.5 percent on the dollar by early September, only to reverse in recent weeks amid concerns its sharp rise was hurting China’s exporters. Traders are unsure how much authorities will allow it to “correct”.

ING economist Iris Pang forecast the yuan would strengthen to 6.5 per dollar at the end of this year. She said in a note that solid economic growth has given policymakers room to continue with a de-risking and deleveraging campaign, resulting in tighter liquidity conditions.

China International Capital Corporation’s analyst Liang Hong forecast the yuan would weaken slightly to near 6.68 at end-2017, but rebound to 6.48 per dollar by end-2018.

The Thomson Reuters/HKEX Global CNH index, which tracks the offshore yuan against a basket of currencies on a daily basis, stood at 95.85, weaker than the previous day’s 95.9.

The offshore yuan was trading 0.02 percent weaker than the onshore spot at 6.6451 per dollar.

Offshore one-year non-deliverable forwards contracts (NDFs), considered the best available proxy for forward-looking market expectations of the yuan’s value, traded at 6.798, 2.20 percent weaker than the midpoint.

One-year NDFs are settled against the midpoint, not the spot rate.

Copyright Reuters, 2017

Source: Brecorder.com

Related Articles


Please enter your comment!
Please enter your name here

Stay Connected

- Advertisement -

Latest Articles

Popular Articles