SHANGHAI: The yuan was steady on Friday and set for its biggest weekly gain in two months against a broadly softer dollar after a meeting between the Chinese and US presidents slightly eased concerns over geostrategic risks attached to Chinese assets.
The spot yuan was changing hands around 7.2440 per dollar in onshore markets at midday, little changed from the previous late session close, but showing a 0.5% gain for the week so far.
“Investor concerns over Chinese growth loom large, but political events this week could now bolster sentiment more significantly,” DBS said in a note.
US President Joe Biden said a stable relationship between the US and China was good for the world, after holding a high-stakes summit with his Chinese counterpart Xi Jinping on Wednesday.
Xi told American executives in San Francisco on Wednesday that China is ready to be a partner and friend of the United States, and there is plenty of room for bilateral cooperation.
“Of course, certainty in politics is never a given, but we do see the case for some easing in the geopolitical risk premium for Chinese assets relative to just a week ago,” DBS said, adding yuan’s strength this week was also helped by a weak dollar.
Yuan weakens property sector woes
Maybank said in a note to clients that an oil price set to decline for a fourth consecutive week could make the US Federal Reserve “a tad more comforted that inflation is in check and could potentially become more growth supportive, which should lead to the decline of the USD”.
Offshore yuan will also be supported by the People’s Bank of China’s bill issuance in Hong Kong next week, Maybank said.
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