AIRLINK 62.18 Decreased By ▼ -0.51 (-0.81%)
BOP 6.23 Increased By ▲ 0.03 (0.48%)
CNERGY 4.98 Increased By ▲ 0.03 (0.61%)
DFML 14.93 Decreased By ▼ -0.23 (-1.52%)
DGKC 68.54 Decreased By ▼ -0.05 (-0.07%)
FCCL 17.71 Increased By ▲ 0.06 (0.34%)
FFBL 24.56 Decreased By ▼ -0.62 (-2.46%)
FFL 9.16 Increased By ▲ 0.11 (1.22%)
GGL 9.90 Decreased By ▼ -0.12 (-1.2%)
HBL 108.60 Decreased By ▼ -5.15 (-4.53%)
HUBC 116.79 Increased By ▲ 0.90 (0.78%)
HUMNL 6.69 Increased By ▲ 0.02 (0.3%)
KEL 4.46 Decreased By ▼ -0.11 (-2.41%)
KOSM 4.76 Increased By ▲ 0.16 (3.48%)
MLCF 36.77 Decreased By ▼ -0.04 (-0.11%)
OGDC 123.33 Decreased By ▼ -0.92 (-0.74%)
PAEL 22.32 Decreased By ▼ -0.30 (-1.33%)
PIAA 22.22 Increased By ▲ 1.55 (7.5%)
PIBTL 5.74 Decreased By ▼ -0.01 (-0.17%)
PPL 110.93 Decreased By ▼ -0.87 (-0.78%)
PRL 27.50 Decreased By ▼ -0.08 (-0.29%)
PTC 14.19 Increased By ▲ 0.93 (7.01%)
SEARL 53.10 Increased By ▲ 0.30 (0.57%)
SNGP 63.67 Increased By ▲ 0.66 (1.05%)
SSGC 11.01 Increased By ▲ 0.11 (1.01%)
TELE 9.00 Increased By ▲ 0.30 (3.45%)
TPLP 10.74 Decreased By ▼ -0.16 (-1.47%)
TRG 70.21 Increased By ▲ 1.06 (1.53%)
UNITY 24.04 Increased By ▲ 1.04 (4.52%)
WTL 1.36 Increased By ▲ 0.02 (1.49%)
BR100 6,698 Increased By 18 (0.27%)
BR30 22,618 Increased By 34.8 (0.15%)
KSE100 64,891 Increased By 74 (0.11%)
KSE30 21,536 Decreased By -21 (-0.1%)
Markets

Yuan bounces from 1-week low, investors eye stock risks

  • Prior to market opening, the People's Bank of China (PBOC) set the midpoint rate at 6.4734 per dollar, 29 pips firmer than the previous fix of 6.4763
Published July 27, 2021

SHANGHAI: China's yuan on Tuesday rebounded from a one-week low hit a day earlier, although investors were still keeping a close eye on the possible spillover effects of a mainland stock selloff on currency markets.

Prior to market opening, the People's Bank of China (PBOC) set the midpoint rate at 6.4734 per dollar, 29 pips firmer than the previous fix of 6.4763.

In the spot market, the onshore yuan bounced from a one-week low of 6.4877 per dollar hit a day earlier and traded at 6.4760 by midday, 65 pips firmer than the previous late session close.

Despite a marginal bounce from Monday's lows, traders said market sentiment remained rather weak as investors continued to gauge potential capital outflow risks amid a powerful regulatory crackdown on some sectors.

Yuan nears 1-week low

"The rise in regulatory risk in China has led to equity sell-offs, but its impact on the RMB has been relatively limited thus far," strategists at OCBC Bank in Singapore said in a note.

"Northbound inflow momentum has been fading, but a deeper outflow situation may need to be observed for the RMB to be impinged. Nevertheless, it should still enter as a RMB-negative at the margins. This supports our near-term RMB pessimism."

Meanwhile, the yuan's stubborn strength against its major trading partners prompted some market analysts to revise their outlook for the Chinese currency and trim bets on further rises.

The yuan basket index has persistently traded above 98, a level once considered the ceiling for the index, and is up about 4% so far this year, whereas the local unit only gained 0.8% against the dollar.

"There will be a limit to how far the yuan can appreciate given that the CFETS RMB Index is already at the top of its trading range," said Khoon Goh, head of Asia research at ANZ.

"Hence, in an environment when the USD turns lower, the yuan is likely to underperform the basket," he said.

Goh has revised his year-end forecast for the yuan to 6.40 from 6.30 previously and expects it to trade in a 6.40 to 6.50 range for the rest of the year.

Separately, much of the focus has shifted to the Fed's two-day policy meeting that ends on Wednesday.

Investors would pay close attention to comments on the timing of stimulus tapering.

By midday, the global dollar index fell to 92.589 from the previous close of 92.606, while the offshore yuan was trading at 6.479 per dollar.

Comments

Comments are closed.