China's yuan ended down slightly against the dollar by midday on Friday after the People's Bank of China set a weaker mid-point, reflecting the gains in the dollar against other currencies overnight. But dealers still expected further rises in the yuan in the future as China uses the exchange rate as a tool to target stubbornly high inflation.
"Today's fall is because of the rebound of the dollar these days," said a dealer at a Chinese commercial bank in Shanghai. "But we still believe the yuan has potential to rise further." Spot yuan finished at 6.3826 versus the dollar, slightly weaker than Thursday's close of 6.3813. It has now risen 3.24 percent so far this year and 6.95 percent since the 2010 depegging.
Before trading began, the PBOC fixed the day's trading mid-point at 6.3896, weaker than the previous day's 6.3859. The dollar index rose 0.1 percent in early European trade on Friday after rising 0.5 percent on Thursday, putting downward pressure on the yuan. Traders said investors remain cautious and the yuan is expected to experience some fluctuations ahead of key economic data, including consumer inflation and trade figures, which will be released from September 9 to 15.
Offshore, one-year dollar/yuan non-deliverable forwards (NDFs) were unchanged at 6.2810 on late trade, edging up from 6.2760 at the previous day's close. Their implied yuan appreciation in a year's time dropped slightly to 1.73 percent from 1.81 percent.
Comments
Comments are closed for this article.