The yuan closed slightly lower against the dollar on Monday after the People's Bank of China fixed a weaker mid-point in line with a rise in the US dollar Index. China's trade surplus fell to its lowest in nine months in January after imports surged, supporting government's case ahead of a G20 meeting that it is doing enough to spur domestic demand without speeding up currency appreciation.
On top of strong domestic food prices, surging global commodity prices have contributed to stubbornly-high inflation. Spot yuan closed at 6.5966 to the dollar, down from 6.5919 at Friday's close. It has risen 3.48 percent since its depegging from the dollar in June 2010.
Before trading began, the PBOC fixed its daily mid-point at 6.5985 to the dollar, down from Friday's 6.5952. The fixing, from which the yuan can trade up or down a maximum 0.5 percent in a given day, is the tool that the central bank uses to express the government's intention on the currency. Dollar/yuan offshore forwards rose slightly on Monday to imply slightly less yuan appreciation in the future in line with the spot yuan's performance. Benchmark one-year dollar/yuan non-deliverable forwards were bid at 6.4430 late on Monday, up from 6.4400 at Friday's close. Their implied yuan appreciation in a year's time fell to 2.42 percent from 2.47 percent.
Comments
Comments are closed for this article.