SHANGHAI: China’s yuan strengthened against the US dollar, supported by rising corporate dollar sales and a firmer official fixing after a slide in the greenback in global markets on Monday.
The Chinese currency is on course for its best day in three weeks, while it also looks set for a winning month.
Prior to market opening on Tuesday, the People’s Bank of China lifted its official yuan midpoint to 6.6397 per dollar, 90 pips or 0.14 percent firmer than the previous fix of 6.6487 on Monday.
The stronger midpoint reflected losses in the dollar as investors turned cautious after US President Donald Trump’s former campaign manager was charged with money laundering in the federal probe into Russian meddling in the 2016 presidential election.
In the spot market, the onshore yuan opened at 6.6388 per dollar and was changing hands at 6.6274 at midday, 186 pips firmer than the previous late session close and 0.19 percent stronger than the midpoint.
If spot yuan closes the late night session at the midday level, it would have gained around 0.4 percent against the greenback for the month.
The yuan lost about 1 percent of its value against the greenback in September, the biggest monthly loss since November 2016.
Multiple traders said major Chinese state-owned banks were selling dollars in morning trade to fulfill client orders.
“That was corporate dollar selling, which was financial operations at the end of the month,” said a trader at a Chinese bank in Shanghai.
State-owned banks sold dollars in the forex market in late 2016 and earlier this year in what some traders believe was part of official efforts to prop up the Chinese currency.
Market participants said onshore yuan trade was not affected by recent volatility in the country’s bond market.
China’s 10-year treasury bonds steadied on Tuesday morning as the central bank moved to calm the market with liquidity injections and queried banks on demand for medium-term loans following a sell-off the previous session.
The Thomson Reuters/HKEX Global CNH index, which tracks the offshore yuan against a basket of currencies on a daily basis, stood at 95.83, firmer than the previous day’s 95.79.
Source: Brecorder.com
