SHANGHAI: China’s yuan held steady against the US dollar on Wednesday, as the central bank set a daily midpoint guidance rate at its firmest in a month, while investors were waiting for a press conference later in the day for more policy clarity.
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 7.1016 per dollar, the firmest since Feb. 2 and 923 pips firmer than Reuters’ estimate of 7.1939.
“The 7.20 level is now seen as a big resistance level anchored by PBOC fixings as authorities are unlikely to entertain any wild swings in the currency this week amidst the annual Two Sessions,” said Alex Loo, macro strategist at TD Securities.
Parliamentarians and political advisers gather in Beijing every March for two parallel sets of meetings called the Lianghui or “Two Sessions”.
The yuan has been capped below the 7.2 level against the dollar for the past month.
Meanwhile, investors will keep a close eye on an economy-focused press conference at 3 p.m. in Beijing (0700 GMT), where representatives from PBOC and other regulators may respond to media inquiries.
The spot yuan opened at 7.1949 per dollar and was changing hands at 7.1991 at midday, 21 pips weaker than the previous late session close.
The global dollar index was steady on Wednesday, as traders avoided making big bets ahead of congressional testimony from Federal Reserve Chair Jerome Powell and US jobs data later this week.
The offshore yuan was trading 128 pips weaker than the onshore spot at 7.2119 per dollar.
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