SHANGHAI: China’s yuan was set for a second straight weekly loss on Friday as the dollar was buoyed by safe-haven flows ahead of US Federal Reserve Chair Jerome Powell’s speech at Jackson Hole.
Traders said the yuan was reacting to the buoyant dollar as markets widely expect Powell to offer more details about the US central bank’s monetary tightening plans later in the trading day.
Prior to market opening, the People’s Bank of China (PBOC) set the midpoint rate at 6.8486 per dollar, 50 pips firmer than the previous fix 6.8536. The official guidance came in much firmer than markets had projected, as it did on Wednesday and Thursday. That was seen as a sign the authorities prefer a slower pace of yuan declines. Friday’s midpoint was 65 pips stronger than Reuters’ estimate of 6.8551.
In the spot market, the onshore yuan opened at 6.8488 per dollar and was changing hands at 6.8542 at midday, 72 pips softer than the previous late session close. If the yuan finishes the late night session at the midday level, it would have lost 0.54% for the week.
Traders said the yuan’s losses were somewhat limited by official attempts, including state media commentary and recent firmer-than-expected midpoint fixings, to stabilise sentiment. Economic Daily, a State Council-affiliated newspaper, said on Friday the yuan remained resilient even amid the dollar’s rally, helped by a sharp rebound in foreign trade in the past two months.
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