SHANGHAI: China’s yuan firmed slightly on Monday against a directionless dollar, caught between the global energy shock and cooling inflation at home.
Analysts expect the dollar-yuan rate to remain range-bound as strong exports support the Chinese currency but weak domestic consumption reduces its appeal.
“The yuan is likely to be highly correlated with the dollar index, and will fluctuate within a range,” Nanhua Futures said in a note to clients.
On Monday, the onshore yuan changed hands at 6.7719 per dollar in late morning trading, roughly 0.05 percent firmer than the previous day’s close.
The dollar index eased 0.03 percent in Asia trade.
“The dollar has lost direction,” Huatai Futures said in a report.
“Inflation premium from the energy shock has been counteracted by recent unwinding of bets on Fed rate hikes.”
Over the past week, renewed US strikes on Iran have boosted global oil prices, but US inflation data came in softer than markets had expected.
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