SHANGHAI: China’s yuan eased on Thursday against the dollar, which was broadly firmer as concerns eased in the United States over the banking sector, while investors await March China manufacturing data due on Friday for more clues on the economic recovery.
Prior to the market opening, the People’s Bank of China (PBOC) set the midpoint rate at 6.8886 per dollar, 115 pips weaker than the previous fix of 6.8771.
In the spot market, the onshore yuan opened at 6.8900 per dollar and was changing hands at 6.8958 at midday, 92 pips weaker than the previous late session close.
Currency traders will be closely watching the release of China’s official manufacturing purchasing managers’ index (PMI).
A Reuters poll showed the official manufacturing PMI for March is expected at 51.5 compared with 52.6 in February, when the index marked its fastest pace of growth in more than a decade.
A strong manufacturing PMI could push the offshore spot yuan rate, which was trading at 6.8977 per dollar at midday, towards 6.82, Citi analysts said.
China’s economic performance improved in March from the first two months of the year and the country will expand domestic demand and consolidate its economic recovery, Premier Li Qiang said on Thursday at an economic forum in Boao.
China’s yuan eases, market awaits March PMIs for clues on economic recovery
Meanwhile, the US dollar index rose as fears over the bank sector receded.
“Given waning concerns over the banking sector, the market’s attention will shift back to the economy and price stability,” analysts at Commerzbank said.
Maybank analysts said they continue to see room for a dollar rebound if markets continue to lean towards a rate hike in May.
By midday, the global dollar index had risen to 102.708 from the previous close of 102.640.
The one-year forward value for the offshore yuan traded at 6.7361 per dollar, implying 2.40% appreciation within 12 months.
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