SHANGHAI: China’s yuan eased against the dollar on Friday, giving up modest early gains, pressured in part by an uptick in risk aversion after news emerged that Japan’s former prime minister Shinzo Abe had been shot.
Currency traders said safe-haven demand for the Japanese yen and the dollar rose after Abe was shot on Friday while campaigning for an election in the city of Nara, a government spokesman said.
Prior to market opening, the People’s Bank of China (PBOC) set the midpoint rate at 6.7098 per dollar, 45 pips or 0.07% firmer than the previous fix at 6.7143.
In the spot market, the onshore yuan opened at 6.6940 per dollar and was changing hands at 6.7060 at midday, 45 pips weaker than the previous late session close.
The decline on Friday is also likely to push the yuan on course for a second straight weekly loss, down 0.06% to the dollar for the week.
Currency traders said safe-haven demand was a knee jerk reaction to the Abe news, adding that market participants are likely to quickly switch their attention back to fundamentals.
“Markets are awaiting US non-farm payrolls,” said a trader at a Chinese bank.
Investors are anxious to get the pulse of the world’s largest economy amid US monetary tightening and global recession risks.
“Diverging Sino-US monetary policy has not prompted large size of capital outflow from China, as markets are more worried about the prospects for the US economy,” said Marco Sun, chief financial market analyst at MUFG Bank.