SHANGHAI: China’s yuan inched lower against the dollar on Monday, as investors were cautious ahead of a busy week of overseas central bank monetary policy meetings that could lead to some volatility in currency markets.
The Bank of Japan is seemingly on the brink of ending negative rates on Tuesday, while the market is also focused on the Federal Reserve’s rate outlook due on Wednesday.
Other central banks in Britain, Australia, Norway, Switzerland, Mexico, Brazil and Indonesia are due to meet, with most expected to stand pat on rates.
Prior to the market 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 7.0943 per dollar, 32 pips firmer than the previous fix of 7.0975.
Despite the stronger guidance fix, the central bank continued its months-long practice of setting the rate at levels firmer than market projections, widely viewed by traders as an attempt to keep the currency stable.
Monday’s midpoint was 1,052 pips firmer than a Reuters estimate of 7.1995.
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