China's yuan shot higher in offshore markets on Thursday on suspected rare intervention by Chinese state banks that was seen as a bold gesture by authorities to shake out speculators betting against the currency. The intervention caught the market wrong-footed and catapulted the yuan more than 1 percent higher, putting the offshore rate on track for its biggest daily gain on record.
Investors have been positioning for yuan depreciation since a shock devaluation of the currency in August, which sparked fears the economy was slowing down more than expected. Those bets are easier to place in offshore markets, where Chinese authorities have less influence.
"The big picture is that policy makers are doing everything they can do to dampen expectations that the yuan will depreciate much," said Mark Williams, an economist at Capital Economics in London. The offshore yuan spot rate strengthened more than 1 percent to 6.39 per dollar from 6.4698 earlier in the day. It marked the offshore rate's highest level since the devaluation. Offshore traded volumes spiked as much as 10 times their monthly average, Thomson Reuters data showed. The offshore yuan discount to the onshore yuan spot market narrowed to 0.47 percent from 1.56 percent on Wednesday.
Comments
Comments are closed.