SHANGHAI/SINGAPORE: China’s yuan eased slightly against a strengthening dollar on Monday, though moves were limited as investors cautiously await the outcome of a key financial policy conference and economic data due later this week.
State leaders, regulators and top bankers will gather at the closed-door national financial work conference in Beijing this week, Bloomberg News has reported, and the twice-a-decade policy conference could set medium-term priorities for the broad financial industry.
“We expect financial stability to remain policymakers’ top priority in the upcoming conference, amid local government implicit debt clean-up and property market slowdown,” analysts at Goldman Sachs said in a note.
“This conference might also discuss topics like how the financial sector can better serve the real economy.”
Prior to market opening on Monday, the People’s Bank of China (PBOC) set the midpoint rate, around which the yuan is allowed to trade in a 2% band, at 7.1781 per dollar, 1 pip firmer than the previous fix of 7.1782.
The central bank set the official guidance rate quite high, which traders and analysts widely consider to be an attempt to prevent rapid yuan declines.
China’s yuan holds steady while waiting for signs of economy bottoming
Monday’s midpoint was 1,384 pips firmer than a Reuters estimate of 7.3165.
In the spot market, onshore yuan opened at 7.3143 per dollar and was changing hands at 7.3181 at midday, 10 pips weaker than the previous late session close.
It touched a low of 7.3191 in morning deals, 26 pips away from hitting Monday’s lower end of the trading band of 7.3217, traders said, adding that this largely reflects broad strength in the greenback in global markets.
They added that markets will quickly shift their attention to October manufacturing activity data due on Tuesday to gauge the health of the world’s second largest economy.
“China’s PMIs will be seen as a reminder that the economy is stabilising but that message is not a panacea for the yuan,” analysts at HSBC said in a note.
“It remains in a challenging position given broad dollar strength, yield divergence and net FX demand in China is showing little signs of abating.”
By midday, the global dollar index had risen to 106.583 from the previous close of 106.559, while offshore yuan was trading at 7.3273 per dollar.
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