SHANGHAI: China’s yuan languished near seven-month lows on Wednesday as traders cautiously awaited a US inflation report and Federal Reserve policy decision that would set the near-term course for interest rates.
Prior to the market open, the People’s Bank of China set the midpoint rate, around which the yuan is allowed to trade in a 2% band, at 7.1133 per US dollar, slightly firmer than the previous fix of 7.1135.
“There isn’t much intra-day fluctuations now, and we are all watching the mid-point rate,” said a trader at a foreign bank. In the spot market, the onshore yuan opened at 7.2520 per dollar and was changing hands at 7.2536 at midday, little changed from the previous late session close. The dollar steadied on Wednesday after hitting a four-week high against peer currencies overnight as market players awaited key US inflation data and the Federal Reserve’s updated interest rate projections due later in the day.
The US dollar has rebounded after Friday’s stronger-than-expected jobs report raised the prospect of inflation remaining sticky, making the US central bank less likely to cut rates in the coming months.
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