HONG KONG: China’s yuan firmed against the dollar on Friday following firmer central bank guidance, but held tight ranges as investors awaited more clues on stimulus that could be announced at a key policymaker meeting this month.
At the annual Politburo meeting, which is expected to take place before the end of July, China’s top leaders will chart the policy course for the rest of the year.
Authorities on Friday unveiled measures to boost consumption of auto and electronic items as part of a broader drive to shore up the country’s faltering economy.
“Investors are looking for more decisive measures from the government over and above what was announced by the authorities and regulators this week,” said Kiyong Seong, lead Asia macro strategist at Societe Generale. “I’ll expect ahead of any announcement the yuan will trade in a tight range.”
Keeping the yuan buoyant on Friday was the central bank’s daily fixing, the midpoint at which the spot rate is allowed to trade 2% on either side. The People’s Bank of China set the midpoint rate at 7.1456 per US dollar prior to market open, firmer than the previous fix 7.1466 and over 500 pips stronger than consensus estimates.
China’s yuan firms after central bank eases cross-border financing rule
The spot yuan opened at 7.1657 per dollar and was changing hands at 7.1691 at midday, 86 pips firmer than the previous late session close and 0.33% weaker than the midpoint.
At midday, the yuan has weakened 0.4% thus far this week.
The global dollar index fell to 100.763 from the previous close of 100.88.
China’s foreign exchange regulator said on Friday at a press briefing that it will use policy measures to stabilise market expectations, as the yuan currency faces renewed downside pressure.
The remarks from Wang Chunying, spokeswoman at the State Administration of Foreign Exchange, came a day after the central bank eased cross-border financing rules, which helped support the yuan.
The offshore yuan was trading 0.04% weaker than the onshore spot at 7.1717 per dollar.
The one-year forward value for the offshore yuan traded at 6.9524 per dollar, indicating a roughly 3.15% appreciation within 12 months.
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