China's yuan firms after stronger PBOC guidance
- The global dollar index rose to 91.235 from the previous close of 91.075.
SHANGHAI: China's yuan edged higher on Thursday after the central bank guided the currency higher, though trading was thin ahead of the Lunar New Year holiday.
Prior to market open, the People's Bank of China set the midpoint rate at 6.4605 per dollar, 64 pips firmer than the previous fix of 6.4669.
The spot market opened at 6.4617 per dollar and was changing hands at 6.4590 at midday, 26 pips firmer than the previous late session close.
The offshore yuan was trading at 6.4636 per dollar.
Traders said the yuan would remain rangebound around current levels due to reduced trading ahead of China's Lunar New Year holiday.
They said for the mid-term, the dollar rebound could be limited by expectations of easing by the US central bank, while China could be the first to tighten its monetary policy due to its steady economic recovery, helping provide support the currency.
"The yuan has been too quiet recently and is expected to remain so for the time being," said a trader at foreign bank.
The Thomson Reuters/HKEX Global CNH index, which tracks the offshore yuan against a basket of currencies on a daily basis, stood at 96.8, firmer than the previous day's 96.76.
Adding to optimism, China reported 30 new COVID-19 cases on the mainland on Feb. 3, up slightly from 25 cases a day earlier but still well below the peaks seen at the height of the latest wave last month.
China's Premier Li Keqiang said on Wednesday the global economy faces "many uncertainties and destabilising factors" as it battles the COVID-19 pandemic.
The PBOC will keep liquidity reasonably ample and maintain support for an economic recovery in 2021 but won't resort to flood-like stimulus, a central banker wrote in magazine article seen on Wednesday.
The dollar traded near its strongest in more than two months against the euro and the yen on Thursday as pessimism about the US economic outlook receded before the release of important data on the jobs market.
The global dollar index rose to 91.235 from the previous close of 91.075.
The offshore yuan was trading at 6.4636 per dollar.
Offshore one-year non-deliverable forwards contracts (NDFs), considered the best available proxy for forward-looking market expectations of the yuan's value, traded at 6.6231, 2.46% away from the midpoint.
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