China's yuan treads water ahead of Lunar New Year holiday
- 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, weakening from the previous day's 96.85.
SHANGHAI: China's yuan barely moved on Tuesday, as trading remained thin ahead of the Chinese Lunar New Year holiday, starting on Feb. 11.
The People's Bank of China set the midpoint rate at 6.4533 per dollar prior to market open, 145 pips firmer than the previous fix of 6.4678.
The spot market opened at 6.4478 per dollar and was changing hands at 6.4495 at midday, 7 pips weaker than the previous late session close.
The offshore yuan was trading 6.44 per dollar.
The dollar languished near its lowest in a week on Tuesday as investors began entertaining doubts about the scale of a recent rally driven by expectations of a faster pandemic recovery in the United States than elsewhere.
The global dollar index fell to 90.751 from the previous close of 90.953.
"There is pressure for the yuan to strengthen due to the renewed dollar weakness, though for the short term it would depend on how the regulators perceive this," said a trader at a Chinese bank.
China's central bank on Monday said its prudent monetary policy would be flexible, targeted and appropriate, with no sudden shifts, as it pledged to continue with interest rate reform.
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, weakening from the previous day's 96.85.
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 6.611, -2.39 percent away from the midpoint.
One-year NDFs are settled against the midpoint, not the spot rate.
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