SHANGHAI: China’s yuan held steady on Wednesday against the dollar amid signals authorities were strengthening their resolve to support slumping share markets.
Sentiment in Chinese stocks was lifted after regulators announced further curbs on short selling and state investors said they were expanding their stockbuying plans.
Bloomberg News also reported that President Xi Jinping would discuss the stock market with financial regulators, though there was no confirmation this had happened or what was discussed.
China’s blue-chip CSI300 extended gains in early trades, after logging its biggest one-day rise since Nov. 2022 on Tuesday.
The yuan got a boost from the latest measures to counter China’s ongoing equity bear market, on top of the central bank’s clear determination to cap the onshore yuan at 7.20 per dollar before the Lunar New Year holiday, said Alvin Tan, head of Asia FX strategy at RBC Capital Markets.
“The market will be closely watching to see what additional measures are taken, otherwise it’s difficult to see China’s equity bear market turnaround decisively yet,” Tan said.
China’s yuan rises on firmer-than-expected fix, stock market support
Meanwhile, the dollar weakened as 10-year treasury yields dipped to 4.09% from Monday’s top of 4.177%.
Prior to the market’s opening, the People’s Bank of China set the midpoint rate, around which the yuan is allowed to trade in a 2% band, at 7.1049 per US dollar, 33 pips firmer than the previous fix at 7.1082.
The spot yuan opened at 7.1862 per dollar and was changing hands at 7.1874 at midday, 9 pips firmer than the previous late session close.
The dollar index fell to 104.075 from the previous close of 104.213.
The offshore yuan was trading 90 pips weaker than the onshore spot at 7.1964 per dollar.
Comments
Comments are closed for this article.