China's yuan strikes six-month high vs dollar

xizhimen

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China's yuan touches 2-week high againt US dollar, set for 4th straight monthly gain
Reuters
Nov 29, 2021

SHANGHAI — China’s yuan strengthened to a two-week high against the dollar on Tuesday and looked set to notch a fourth straight monthly gain, underpinned by persistent corporate demand and signs of liquidity tightness in the money markets.

Prior to market opening, the People’s Bank of China (PBOC) set the midpoint at a near two-month high of 6.3794 yuan per dollar, 78 pips, or 0.12%, firmer than the previous fix of 6.3872.

The midpoint fix was largely in line with market forecasts, traders said, and it was 1 pip weaker than Reuters’ estimate of 6.3793 per dollar.In the spot market, the onshore yuan opened at 6.3788 per dollar and rose to a high of 6.3711, the strongest level since Nov. 16. By midday, it was changing hands at 6.3716, 160 pips firmer than the previous late session close.

If the yuan finishes the late night session at the midday level, it would have gained 0.52% against the dollar for the month.

Traders said along with the firmer guidance rate and persistent corporate conversion of their dollar receipts into the local currency, the yuan also gained support in early deals from tighter cash conditions in the domestic money markets due to month-end demand.

The volume-weighted average rate of the benchmark overnight repo traded in the interbank market was at 2.1739%, the highest level since Oct. 19. And dollar/yuan swap points for the same tenor also jumped to 23.5 points from previous close of 4.8. While investor worries over the economic impact of the new Omicron coronavirus variant ebbed, some analysts raised the possibility of the variant affecting the U.S. Federal Reserve’s policy tightening trajectory.

 

xizhimen

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It's fast approaching landmark threshhold 6, if US dollar keeps this free fall and get to or even pass 6, China's economy can become bigger than US in 2025-2026.
 

xizhimen

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China's yuan strikes six-month high vs dollar
Reuters
December 1, 202112:47 PM CST

SHANGHAI, Dec 1 (Reuters) - China's yuan advanced to a six-month high against the dollar on Wednesday, aided by strong corporate demand as the dollar lost some of its overnight strength against other major currencies.

Th dollar had surged after U.S. Federal Reserve Chair Jerome Powell unexpectedly signaled a faster taper of stimulus, despite uncertainty around the new Omicron coronavirus variant.

Prior to market opening, the People's Bank of China (PBOC) set the midpoint rate at 6.3693 per dollar, 101 pips or 0.16% firmer than the previous fix of 6.3794, the strongest since June 1.

In spot market, the onshore yuan opened at 6.3700 per dollar and quickly jumped to a high of 6.3596, the firmest level since May 31, and was not far from this year's high of 6.3565, having remained on an ascent for the past four months.

By midday, the yuan was changing hands at 6.3625, 23 pips firmer than the previous late session close.

Traders said corporate dollar selling remained the key force driving the yuan higher on Wednesday morning and was likely to continue in the remainder of this year.

Chinese companies usually have higher demand for the yuan in the year-end and towards the Lunar New Year holiday in January due to various upcoming payments.

Some analysts said the yuan had room to make further gains, and they expected the authorities to do little to curb the currency's strength for now.

"Strong exports will keep the yuan resilient," said Eugenia Victorino, head of Asia strategy at SEB.

"Even with expectations of interest rate hikes by the Federal Reserve, we see room for modest declines in USD/CNY to trade to 6.30 by end-2022," she said.

Yuan's trade-weighted value against a basket of major currencies (.CFSCNYI) stood at 102.71 on Wednesday, and was up 8.29% year-to-date, according to Reuters calculation based on official data.

By midday, the broad dollar index traded at 95.959, while the offshore yuan was trading at 6.3648 per dollar.


 

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