China's yuan firms after strong export data

SHANGHAI: China's yuan firmed against the dollar on Tuesday, after data showed the country's exports growth unexpectedly accelerated in August.

The People's Bank of China set the midpoint rate at 6.4533 per dollar prior to market open, 4 pips weaker than the previous fix of 6.4529.

In the spot market, the yuan opened at 6.4553 per dollar and was changing hands at 6.4548 at midday, 32 pips firmer from the previous late session close.

China's exports unexpectedly grew at a faster pace in August, as solid global demand offset some of the pressure on the world's second-biggest economy from a resurgence of domestic COVID-19 cases and supply bottlenecks.

"The robust China exports figure should help alleviate concern over a slowdown for China's economy and excessive RMB basket strength," Ken Cheung, chief Asian FX strategist at Mizuho Bank in Hong Kong, said in a note.

"The PBoC should be less tempted to allow more RMB depreciation to support export growth and will be less urgent to bring forward its required reserves ratio (RRR) cut to this month."

Official data on Monday also showed global investors raised their holdings of Chinese government bonds (CGBs) to a record high for a fifth straight month in August.

China's securities regulator officials said they would further deregulate and open capital markets to foreign investors.

While the dollar has recovered from a selloff after last week's disappointing US jobs data, prevailing uncertainties about the economy mean the Federal Reserve is in no hurry to raise rates, said Maybank in a note.

"A case of Fed taper delay supports sentiment and could weigh on USD in the interim, assuming no unexpected resurgence in COVID infection," Maybank said.

The global dollar index fell to 92.154 from the previous close of 92.192. The offshore yuan was trading at 6.4496 per dollar.