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SHANGHAI; China’s yuan held steady in onshore trade on Friday, while its offshore counterpart firmed against a softening dollaras investors cheered a pause in U.S. interest rate hikes. Another strong central bank setting of the mid-point guidance rate also helped stabilise the yuan. Prior to the market open, the People’s Bank of China set the midpoint rate at 7.1796 per U.S.dollar.
In the spot market, the yuan opened at 7.3160 per dollar and was changing hands at 7.3143 at midday, roughly unchanged from the previous late session close. The offshore yuan was trading 0.1% stronger from the onshore spot at 7.3218 per dollar. The dollar was on course for a weekly decline against a basket of currencies as traders wagered that the U.S. Federal Reserve was most likely done with rate increases. A trader at a Chinese bank said the expectation would continue to pressure the dollar index and help boost the yuan. “However, the yield gap between China and U.S. would not narrow obviously anytime soon, which would limit the yuan’s rebound.” The market now awaits U.S. jobs data due later in the day for more clues on potential policy direction.
China’s services activity expanded at a slightly faster pace in October, a private-sector survey showed on Friday, with sales growing at the softest rate in 10 months and employment stagnating as business confidence waned. The China Center for Economic Research of Peking University expects the onshore yuan will trade between 7.28 and 7.33 in November, citing the economic recovery trend and authorities’ measures to stabilise the exchange rate.
China’s central bank vowed it will maintain the stable operation of the financial markets and prevent the risk of large fluctuations in the yuan exchange rate in a statement on Thursday.
DBS analysts said sentiment would also be supported by a thaw in US-China relations. U.S. Treasury Secretary Janet Yellen on Thursday said that a full de-coupling of the U.S. and Chinese economies was “simply not practical.” The global dollar index fell to 106.119 from the previous close of 106.124. The yuan market at 4:06AM GMT: ONSHORE SPOT: Item Current Previous Change PBOC midpoint 0.00% 7.1796 7.1797 Spot yuan -0.01% 7.3143 7.3135 Divergence from midpoint* 1.88% Spot change YTD -5.66% Spot change since 2005 revaluation 13.16% Key indexes: Item Current Previous Change Thomson Reuters/HKEX 0.0 CNH index Dollar index 106.119 0.0 106.124 *Divergence of the dollar/yuan exchange rate.
Negative number indicates that spot yuan is trading stronger than the midpoint. The People’s Bank of China (PBOC) allows the exchange rate to rise or fall 2% from official midpoint rate it sets each morning. OFFSHORE CNH MARKET Instrument Current Difference from onshore Offshore spot yuan * -0.10% 7.3218 Offshore non-deliverable 7.124 0.78% forwards
In the spot market, the yuan opened at 7.3160 per dollar and was changing hands at 7.3143 at midday, roughly unchanged from the previous late session close. The offshore yuan was trading 0.1% stronger from the onshore spot at 7.3218 per dollar. The dollar was on course for a weekly decline against a basket of currencies as traders wagered that the U.S. Federal Reserve was most likely done with rate increases. A trader at a Chinese bank said the expectation would continue to pressure the dollar index and help boost the yuan. “However, the yield gap between China and U.S. would not narrow obviously anytime soon, which would limit the yuan’s rebound.” The market now awaits U.S. jobs data due later in the day for more clues on potential policy direction.
China’s services activity expanded at a slightly faster pace in October, a private-sector survey showed on Friday, with sales growing at the softest rate in 10 months and employment stagnating as business confidence waned. The China Center for Economic Research of Peking University expects the onshore yuan will trade between 7.28 and 7.33 in November, citing the economic recovery trend and authorities’ measures to stabilise the exchange rate.
China’s central bank vowed it will maintain the stable operation of the financial markets and prevent the risk of large fluctuations in the yuan exchange rate in a statement on Thursday.
DBS analysts said sentiment would also be supported by a thaw in US-China relations. U.S. Treasury Secretary Janet Yellen on Thursday said that a full de-coupling of the U.S. and Chinese economies was “simply not practical.” The global dollar index fell to 106.119 from the previous close of 106.124. The yuan market at 4:06AM GMT: ONSHORE SPOT: Item Current Previous Change PBOC midpoint 0.00% 7.1796 7.1797 Spot yuan -0.01% 7.3143 7.3135 Divergence from midpoint* 1.88% Spot change YTD -5.66% Spot change since 2005 revaluation 13.16% Key indexes: Item Current Previous Change Thomson Reuters/HKEX 0.0 CNH index Dollar index 106.119 0.0 106.124 *Divergence of the dollar/yuan exchange rate.
Negative number indicates that spot yuan is trading stronger than the midpoint. The People’s Bank of China (PBOC) allows the exchange rate to rise or fall 2% from official midpoint rate it sets each morning. OFFSHORE CNH MARKET Instrument Current Difference from onshore Offshore spot yuan * -0.10% 7.3218 Offshore non-deliverable 7.124 0.78% forwards
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