SHANGHAI: The yuan on Friday hit the strongest level against the dollar in three weeks, and was set for the biggest gain in a month bolstered by China’s robust export performance in March and broad weakness in the greenback.
The spot yuan was changing hands at 6.8465 at midday, 215 pips firmer than the previous late session close, after China’s central bank set a stronger midpoint rate.
Data released on Thursday showed China’s exports shot up 14.8% in March from a year ago, after five straight months of declines. Optimism generated by the upcoming Canton Fair also helped counter some concerns over the soft outlook for global growth.
Free of the restrictions imposed during the pandemic, the Canton Fair - the country’s biggest trade expo - will be welcoming overseas attendees in person for the first time in three years from Saturday.
Also aiding yuan sentiment, China’s central bank governor Yi Gang said in remarks published on Friday that China’s economy is stabilising and likely to grow around 5% this year.
The yuan’s strength comes at a time when the dollar is weakening, as signs of softening inflation has strengthened expectations that the US Federal Reserve may be close to ending its aggressive tightening cycle.
China’s yuan weakens as markets await US inflation data
The greenback took another leg down on Friday and the U.S dollar index, which measures the currency against six major peers, slid to a roughly one-year low of 100.78.
US Labor Department data released on Thursday showed the producer price index (PPI) fell by the most in nearly three years last month. Data released a day earlier had showed consumer price inflation moderating.
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