SHANGHAI: China’s yuan eased slightly against the US dollar on Tuesday, following a weaker official midpoint and strength in the greenback.
On Tuesday morning, the dollar retreated slightly but it remained close to its one-week high against a basket of currencies, as the euro continued to be weighed down by political uncertainty in Germany.
Prior to market opening on Tuesday, the People’s Bank of China set the day’s midpoint rate at 6.6356 per dollar, 85 pips or 0.13 percent weaker than the previous fix of 6.6271.
The onshore yuan opened at 6.6400 per dollar and was changing hands at 6.6356 at midday, 56 pips weaker than the previous late session close and unchanged from the midpoint.
Traders said spot yuan edged lower on the strength of the dollar.
A trader at a foreign bank in Shanghai said there was no clear direction for the yuan on Tuesday, and many market participants followed the dollar’s movements overseas.
Domestic traders say the market has already factored in that the Federal Reserve will hike US interest rates next month.
The Thomson Reuters/HKEX Global CNH index, which tracks the offshore yuan against a basket of currencies on a daily basis, stood at 95.27, firmer than the previous day’s 95.24.
The global dollar index slipped to 94.037 from the previous close of 94.08.
The offshore yuan was trading 0.10 percent weaker than the onshore spot at 6.6425 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 6.7935, 2.32 percent weaker than the midpoint.
One-year NDFs are settled against the midpoint, not the spot rate.
Source: Brecorder.com
