SHANGHAI: China’s yuan steadied against the dollar on Monday, as a firmer-than-expected official guidance fix partially offset uncertainty around the broad economic outlook and currency vulnerability.
China’s factory output growth hit a six-month low in May but retail sales picked up steam, while home prices fell and new bank lending rose less than expected.
The mixed bag of data fed into uncertainty around the economic outlook for the rest of the year, despite a trade truce between Washington and Beijing, analysts said.
“The US-China trade truce was not enough to prevent a broader loss of economic momentum last month,” Zichun Huang, China economist at Capital Economics, said in a note.
“With tariffs set to remain high, fiscal support waning and structural headwinds persisting, growth is likely to slow further this year.”
As of 0345 GMT, the onshore yuan was 0.01% higher at 7.1849 per dollar, while its offshore counterpart was up about 0.04% at 7.1860.
Investors, meanwhile, were anxiously awaiting more policy guidance from top financial officials, including from the central bank governor and securities regulator, who are scheduled to speak at the annual Lujiazui Forum later this week.
China’s yuan slips as Middle East tensions rise
Market participants expect the yuan to continue trading sideways as they await fresh catalysts, either from the dollar’s broader performance or any policy signals from the upcoming Lujiazui Forum, a foreign bank trader said.
The annual forum is scheduled for June 18-19 in Shanghai.
Prior to the market opening, the People’s Bank of China (PBOC) set the midpoint rate at 7.1789 per dollar, and 65 pips firmer than a Reuters’ estimate of 7.1854.
The spot yuan is allowed to trade 2% either side of the fixed midpoint each day.
In global markets, the dollar firmed against major currencies, underpinned by rising safe-haven bid on the back of persistently heightened Middle East tensions.
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