SHANGHAI: China’s yuan firmed against the retreating US dollar on Friday but most traders were on the sidelines hoping Beijing would announce more stimulus measures this weekend to get the shaky economy on more solid footing.
The Ministry of Finance will detail plans on fiscal stimulus at a much-anticipated news conference on Saturday morning. The magnitude of the stimulus could affect sentiment on China assets including the yuan.
“Given widespread expectations of a fiscal package announcement in the 2-3 trillion yuan range, it is going to be difficult for Finance Minister Lan to surprise positively in a significant way in my view,” said Alvin Tan, head of Asia FX strategy at RBC Capital Markets.
Reuters reported last month that China plans to issue special sovereign bonds worth about 2 trillion yuan ($284.43 billion) this year as part of fresh fiscal stimulus.
Citi’s traders and analysts said the offshore yuan may trade in a tight range ahead of Saturday’s press conference but suggested it could strengthen ahead given their positive view of China’s market after policymakers pivoted to more forceful growth measures. The traders said they would only buy the dollar against the yuan if the pair dips below 7.00.
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