AIRLINK 70.35 Decreased By ▼ -2.71 (-3.71%)
BOP 4.98 Decreased By ▼ -0.11 (-2.16%)
CNERGY 4.33 Decreased By ▼ -0.04 (-0.92%)
DFML 31.30 Decreased By ▼ -1.15 (-3.54%)
DGKC 76.80 Increased By ▲ 1.31 (1.74%)
FCCL 19.90 Increased By ▲ 0.38 (1.95%)
FFBL 34.87 Decreased By ▼ -1.28 (-3.54%)
FFL 9.13 Decreased By ▼ -0.09 (-0.98%)
GGL 9.85 No Change ▼ 0.00 (0%)
HBL 113.52 Decreased By ▼ -3.18 (-2.72%)
HUBC 132.85 Increased By ▲ 0.16 (0.12%)
HUMNL 7.05 Decreased By ▼ -0.05 (-0.7%)
KEL 4.29 Decreased By ▼ -0.12 (-2.72%)
KOSM 4.33 Decreased By ▼ -0.07 (-1.59%)
MLCF 36.45 Increased By ▲ 0.25 (0.69%)
OGDC 133.00 Decreased By ▼ -0.50 (-0.37%)
PAEL 22.50 Decreased By ▼ -0.10 (-0.44%)
PIAA 24.30 Decreased By ▼ -1.71 (-6.57%)
PIBTL 6.51 Decreased By ▼ -0.04 (-0.61%)
PPL 117.16 Increased By ▲ 1.85 (1.6%)
PRL 26.33 Decreased By ▼ -0.30 (-1.13%)
PTC 13.55 Decreased By ▼ -0.55 (-3.9%)
SEARL 52.25 Decreased By ▼ -1.20 (-2.25%)
SNGP 68.78 Increased By ▲ 1.53 (2.28%)
SSGC 10.60 Decreased By ▼ -0.10 (-0.93%)
TELE 8.45 Increased By ▲ 0.03 (0.36%)
TPLP 10.84 Increased By ▲ 0.09 (0.84%)
TRG 59.83 Decreased By ▼ -4.04 (-6.33%)
UNITY 25.10 Decreased By ▼ -0.02 (-0.08%)
WTL 1.29 Increased By ▲ 0.02 (1.57%)
BR100 7,433 Decreased By -28.4 (-0.38%)
BR30 24,062 Decreased By -109.2 (-0.45%)
KSE100 71,027 Decreased By -76 (-0.11%)
KSE30 23,367 Decreased By -27.7 (-0.12%)
Markets

China's yuan firms, market shrugs off weaker midpoint

SHANGHAI: China's yuan firmed against the US dollar on Tuesday, despite the central bank's weaker midpoint
Published May 2, 2017

 

SHANGHAI: China's yuan firmed against the US dollar on Tuesday, despite the central bank's weaker midpoint fixing, after the greenback pared some of its overnight gains in Asian trade, although trading ranges remained tight.

The People's Bank of China fixed its official yuan midpoint at 6.8956 per dollar prior to the market open on Tuesday, the weakest level since April 11 and 25 pips or 0.04 percent softer than the previous fix of 6.8931.

However, traders said a pullback in the dollar index lifted the Chinese currency in morning trade while overall domestic foreign exchange market was stable.

"The spot yuan swung within a very narrow range of around only 10 pips. The market was still looking out for a direction," said a trader at a Chinese bank in Shanghai, adding such sideways price action is likely to persist for the week.

The spot market opened at 6.8946 per dollar and was changing hands at 6.8955 at midday, 15 pips stronger than the previous late session close and flat from the midpoint.

The slight price swings have allowed some institutions to make multiple intraday trades to earn quick profits, some traders said.

A gauge that measures US dollar strength against six other currencies edged down to 99.027 from the previous close of 99.077, after hitting a high of 99.208.

The global dollar index had inched higher overnight following surging US long-term Treasury yields, driven up by Treasury Secretary Steven Mnuchin commented on the possibility of ultra long-term bond issuance.

The daily trading volume stood at $11.34 billion as of midday.

The onshore spot also gained some support from its offshore counterpart amid rising yuan borrowing costs in Hong Kong.

The offshore yuan traded 0.01 percent firmer than the onshore spot at 6.8951 per dollar as of midday.

The CNH Hong Kong Interbank Offered Rate benchmark (CNH Hibor), set by the city's Treasury Markets Association (TMA), rose to 3.39533 percent for the overnight contracts , the highest level in nearly one month.

The one-week tenor also edged up on Tuesday.

The onshore spot yuan weakened around 0.2 percent to the dollar last month, while the index for the yuan's value based on the market's traded-weighted basket fell to 92.78 at the end of April, 0.16 percent lower than a month earlier, according to official data from the China Foreign Exchange Trade System (CFETS).

The Thomson Reuters/HKEX Global CNH index, which tracks the offshore yuan against a basket of currencies on a daily basis, stood at 93.76, weaker than the previous day's 93.89.

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 7.092, -2.77 percent away from the midpoint.

One-year NDFs are settled against the midpoint, not the spot rate.

Copyright Reuters, 2017
 

Comments

Comments are closed.