SHANGHAI: China’s yuan eased against the dollar on Monday as the greenback rose after a robust US jobs report dashed expectations of a near-term rate cut, but China’s central bank continued to use the official guidance fix to keep the currency stable.
The dollar touched its highest level since Dec. 11 after data showed the US jobs market was stronger than expected, which could make it difficult for the Federal Reserve to start cutting interest rates in May as envisaged by financial markets.
Prior to the market’s opening, the People’s Bank of China (PBOC) set the midpoint rate, around which the yuan is allowed to trade in a 2% band, at 7.107 per US dollar, 1018 pips firmer than Reuters’ estimate, the biggest discrepancy since November 2023. Traders and analysts interpreted the strong bias at the fix as an attempt to stabilise the yuan.
The spot yuan opened at 7.1965 per dollar and was changing hands at 7.1974 at midday, 34 pips weaker than the previous late session close.
China’s services activity expanded at a slightly slower pace in January as new orders fell, a private-sector survey showed on Monday, suggesting a soft start for the world’s No.2 economy amid tepid demand and a property slump.
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