April 19, 2021

Market and Financial News

Market and Financial News Aggregator

Yuan eases to 2-month low, stronger dollar prompts investors to revise yuan forecasts

4 min read

Article content

SHANGHAI — China’s yuan weakened to a

more than two-month low against a much strengthened dollar on

Monday, with a recent rebound in the greenback shaking many

market participants’ expectations for a firmer Chinese currency

this year.

The dollar held gains on Monday after data showed

jobs growth in the United States beat expectations in February,

backing up the view of Federal Reserve officials who have said

that a recent rise in U.S. government bond yields is justified

by an improving economic outlook.

Prior to the market opening, the People’s Bank of China

(PBOC) set the midpoint rate at 6.4795 per dollar,

109 pips or 0.17% firmer than the previous fix of 6.4904.

In the spot market, the onshore yuan opened at

6.4995 per dollar and weakened to a low of 6.5110, the softest

level since Jan. 4.

By midday, it was changing hands at 6.5103, 138 pips weaker

than the previous late session close.

Traders said the sharp losses in the yuan were capped as

some corporate clients rushed to take advantage of the firmer

dollar to convert their dollar receipts, offseting the weakness

in the local unit.

But the recent bounce in the dollar and fast rising U.S.

yields have prompted many investors to re-evaluate forecasts for

Advertisement

This advertisement has not loaded yet, but your article continues below.

Article content

the yuan, which the market had expected to be stronger for the

remainder of this year.

Ji Tianhe, head of FXLM strategy for global markets China at

BNP Paribas in Beijing, has shifted to a bearish outlook for the

yuan against the backdrop of narrowing yield gap between China

and the United States, a stronger dollar and rising importers’

demand for the greenback.

“Financial conditions are unlikely to be too tight and will

therefore allow the real economy to deleverage smoothly,” Ji

said.

“Moreover, we think the risk for USD/CNY is to the upside

where the PBOC is concerned, as it is likely to allow more

capital to flow out than less,” he said, expecting the yuan to

weaken to 6.8 per dollar.

Wang Ju, senior FX strategist at HSBC, also expects the yuan

to weaken from the current levels.

“We have the view that USD/RMB will trade two-way in 2021

and end the year at 6.60,” she said in a note.

“The return of USD strength has been a bit earlier compared

to our expectations. Exports strength could be overshadowed if

USD yields keep going higher.”

The global dollar index rose to 92.064 by midday,

while the offshore yuan was trading at 6.5246 per

dollar.

The yuan market at 0400 GMT:

ONSHORE SPOT:

Item Current Previous Change

PBOC midpoint 6.4795 6.4904 0.17%

Spot yuan 6.5103 6.4965 -0.21%

Divergence from 0.48%

midpoint*

Spot change YTD 0.28%

Spot change since 2005 27.13%

revaluation

Key indexes:

Item Current Previous Change

Thomson 96.66 96.98 -0.3

Advertisement

This advertisement has not loaded yet, but your article continues below.

Article content

Reuters/HKEX

CNH index

Dollar index 92.064 91.891 0.2

*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 6.5246 -0.22%

*

Offshore 6.6865 -3.10%

non-deliverable

forwards

**

*Premium for offshore spot over onshore

**Figure reflects difference from PBOC’s official midpoint,

since non-deliverable forwards are settled against the midpoint.

.

The yuan market at 0400 GMT:

ONSHORE SPOT:

Item Current Previous Change

PBOC midpoint 6.4795 6.4904 0.17%

Spot yuan 6.5103 6.4965 -0.21%

Divergence from 0.48%

midpoint*

Spot change YTD 0.28%

Spot change since 2005 27.13%

revaluation

Key indexes:

Item Current Previous Change

Thomson 96.66 96.98 -0.3

Reuters/HKEX

CNH index

Dollar index 92.064 91.891 0.2

*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 6.5246 -0.22%

*

Offshore 6.6865 -3.10%

non-deliverable

forwards

**

*Premium for offshore spot over onshore

**Figure reflects difference from PBOC’s official midpoint,

since non-deliverable forwards are settled against the midpoint.

.

(Reporting by Winni Zhou and Andrew Galbraith; Editing by

Lincoln Feast.)

In-depth reporting on the innovation economy from The Logic, brought to you in partnership with the Financial Post.

Comments

Postmedia is committed to maintaining a lively but civil forum for discussion and encourage all readers to share their views on our articles. Comments may take up to an hour for moderation before appearing on the site. We ask you to keep your comments relevant and respectful. We have enabled email notifications—you will now receive an email if you receive a reply to your comment, there is an update to a comment thread you follow or if a user you follow comments. Visit our Community Guidelines for more information and details on how to adjust your email settings.

Reuters

2021-03-07 23:42:11

All news and articles are copyrighted to the respective authors and/or News Broadcasters. VIXC.Com is an independent Online News Aggregator


Read more from original source here…

Leave a Reply

Copyright © All rights reserved. | Newsphere by AF themes.