HONG KONG: China's yuan edged up slightly against the dollar on Monday after the central bank set a record high midpoint to reflect an overnight decline of the US dollar, boosting expectations that the currency may gain for the third consecutive month.
The yuan has risen 1.8 percent so far this year, with mos tof the gains made in April and June, while most other emerging market currencies have suffered falls,
Spot yuan traded at 6.1178 per dollar near midday, up 0.02 percent from the previous close. The People's Bank of China (PBOC) fixed the yuan's midpoint at 6.1554, or 0.04 percent firmer than Friday's 6.1578.
Traders said strong economic data from China should support the yuan, but it was likely to stay range-bound until the US Federal Reserve announces its plan to taper bond purchases. The Fed's key policy setting committee meets on Tuesday and Wednesday
"I doubt whether the yuan spot could breach 6.11 in the coming two weeks," said a trader at a Chinese bank in Shanghai.
Some traders suspected the PBOC might be intervening in the spot market to prevent its currency from rising too fast, in order to gradually achieve its aim of narrowing the gap between yuan midpoint fixing and spot rate.
The world's second-largest economy's strong economic indicators in August and bright outlook have made several investment banks, including Deustche Bank and UBS, upgrade forecasts for GDP growth recently.
China should hit its growth target of 7.5 percent this year, World Bank Group President Jim Yong Kim said on Sunday.
News that Lawrence Summers, perceived as relatively hawkish and less in favour of quantitative easing, has pulled out of the Fed race, would be genrally supportive for Asian currencies, Credit Agricole said in a note sent to clients.
Comments
Comments are closed for this article.