Yuan holds steady, softer PBOC fixing caps bullish momentum
- Its offshore counterpart traded at 6.7583 yuan per dollar , also down about 0.01%
HONG KONG: China’s yuan was largely steady against the US dollar on Tuesday, despite the central bank setting its midpoint guidance at a one-week low, as the country’s exports strength underpinned the currency.
The yuan was off a touch by 0.01% at 6.7570 per dollar, extending a second day of modest declines after hitting its strongest level since February 2023 on Friday.
Its offshore counterpart traded at 6.7583 yuan per dollar , also down about 0.01%.
Before the market opened, the People’s Bank of China set the midpoint rate at 6.7917 per dollar, its weakest since July 28 and 322 pips weaker than a Reuters estimate. The spot yuan is allowed to trade 2% on either side of the midpoint each day
The weak guidance came despite the dollar nursing losses after sliding in the wake of yen-buying intervention and easing oil prices. The dollar’s six-currency index was 0.02% lower at 99.99,near a 1-1/2-month low.
“Fixing bias has not shifted. PBoC continues to lean against yuan appreciation pace,” Maybank analysts said in a note. The central bank remains cautious against bullish yuan moves by keeping the midpoint weaker than market expectations, particularly so when the dollar weakens, they added.
However that also points to scope for further yuan gains, with the strong trade surplus reinforcing appreciation momentum amid a rise in the FX settlement ratio, Maybank said.
China’s manufacturing sector expanded at its slowest pace in four months in July, as output and new orders rose more slowly, while export orders returned to growth after a contraction, a private-sector survey showed on Monday.
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