- The People's Bank of China (PBOC) set the midpoint rate at 6.4728 per dollar prior to the market open
SHANGHAI: China's yuan eased against a firmer dollar on Wednesday, pressured by a weaker-than-expected official guidance rate and market expectations of policy divergence between China and the United States.
The People's Bank of China (PBOC) set the midpoint rate at 6.4728 per dollar prior to the market open, 77 pips firmer than the previous fix of 6.4805, but a tad weaker than Reuters estimate of 6.4697.
"The midpoint rate is weaker than expected, as the PBOC doesn't want the yuan to rise too quickly because of the shift of USD Index," said a trader at a Chinese bank.
In the spot market, the yuan opened at 6.4715 per dollar and was changing hands at 6.4777 at midday, 72 pips weaker than the previous late session close.
Weakening Chinese economic data has boosted analysts' expectations that policymakers will announce more easing measures to boost activity, while central bank chief also pledged to stabilize the supply of credit in a meeting on Monday.
As for the Fed, traders are awaiting clues from its Jackson Hole Symposium later this week on when and how it will begin tapering stimulus.
"The policy divergence between the PBOC and Fed is clear, and this should limit any RMB strengthening expectations in the near term," said Terence Wu, FX strategist at OCBC.
"The essentially leaves the USD-CNH still locked in within the 6.4500 to 6.5000 range."
"We do not expect any major new guidance to be provided by Fed Chair Powell at Jackson Hole, as the Fed continues to watch the recent spread of the Delta variant across the US," said Mohammed Kazmi, Macro Strategist at Union Bancaire Privée.
The United States could get COVID-19 under control by early next year if vaccinations ramp up, Dr. Anthony Fauci, the nation's top infectious disease expert, said on Tuesday.
The global dollar index rose to 93.013 from the previous close of 92.913, while the offshore yuan was trading at 6.4755 per dollar.