HONG KONG: China’s yuan strengthened against the US dollar on Friday, and was heading towards the fifth week of gains ahead of a closely-watched US tariff deadline.
Markets’ attention has largely turned to US President Donald Trump’s July 9 deadline when the 90-day pause on his April 2 tariffs ends, keeping investors on tenterhooks about what happens to levies on goods for countries yet to secure trade deals with Washington.
The yuan was 0.1% higher at 7.1652 to the dollar by 0312 GMT. Its offshore counterpart traded at 7.1646 yuan per dollar, also up about 0.1%.
The yuan is now set to register a fifth straight week of gains, the longest winning streak since the start of early April when it recovered from a slide induced by Trump’s tariff shock.
“It remains to be seen what will happen on 8-9 July,” analysts at Barclays said in a note. Central banks in the region are likely to take a more cautious tone, with a “greater willingness to wait and see”, they said.
Prior to the market opening, the People’s Bank of China set the midpoint rate at 7.1535 per dollar, 153 pips firmer than a Reuters’ estimate and near the strongest since November last year.
The spot yuan is allowed to trade 2% either side of the fixed midpoint each day. Based on Friday’s official guidance, the yuan is allowed to drop as far as 7.2966.
Investors generally expect the USD/CNY will now likely hover around current levels, though some are concerned about potential downside risks for the dollar as it continues to weaken, analysts at Bank of America wrote in a note.
The Hong Kong dollar also strengthened to move off the weak side of the trading band after the city’s de facto central bank intervened twice on Friday and sold a total of $3.78 billion against the local currency to defend the peg.
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