Chinese yuan remains stable against the dollar, value against its peers reaches its highest level in 6 years

SHANGHAI, Nov. 24 (Reuters) – The yuan was broadly stable against the dollar on Wednesday,

although its value peaked nearly six years on a currency index belonging to China’s major trading partners.

A booming trade surplus, fueled by strong export growth and seasonal year-end demand, helped the yuan resist overall dollar strength as exporters converted more revenue to dollars, the yuan said. tradespeople.

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Before the market opened, the People’s Bank of China (PBOC) pegged the median rate at 6.3903 per dollar, 26 pips higher than the previous patch of 6.3929.

Wednesday’s midpoint largely matched market expectations after being consistently weaker than projections over the past week.

The firmer fixation sent the index measuring the trade-weighted value of the yuan (.CFSCNYI) to a nearly six-year high of 102.53, the highest since December 3, 2015 and up 8.11% since the beginning of the year.

However, the onshore yuan only gained 2.14% against the dollar during the same period.

“The authorities appear to have focused more on supporting the USD / CNY rather than capping the RMB index,” Irene Cheung, senior Asia strategist at ANZ.

Cheung added that the recent weaker-than-expected mid-term fixings of the yuan and occasional dollar purchases by state banks have helped to cap the yuan between 6.36 and 6.37 per dollar.

In the spot market, the onshore Yuan opened at 6.3890 to the dollar and changed hands at 6.3918 by noon, 5 pips lower than the previous session’s close.

Despite strong business demand for the yuan, traders said market participants questioned whether the yuan would change course, given the prospect of tightening monetary policy in other major economies, including the United States. United.

“We expect the Chinese yuan to continue to trade well, even as the US Federal Reserve has embarked on the normalization of its monetary policy,” ANZ’s Cheung said.

But a trader at a Chinese bank said the rapid growth seen in the export sector since the pandemic was unsustainable, while any potential Fed interest rate hikes next year would inevitably attract capital. global to dollar-denominated assets.

As of noon, the broad dollar index stood at 96.578 from the previous close of 96.517, while the offshore yuan traded at 6.3931 per dollar.

The yuan market at 0401 GMT:

PLACE ON LAND:

Key indexes:

* Divergence in dollar / yuan exchange rate. A negative number indicates that the 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 the official median rate it sets each morning.

CNH OFFSHORE MARKET

* Premium for the offshore spot on onshore

** The figure reflects the difference from the official midpoint of the PBOC, as undeliverable futures are settled relative to the midpoint. .

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Reporting by Winni Zhou and Andrew Galbraith; Editing by Simon Cameron-Moore

Our standards: Thomson Reuters Trust Principles.


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