HONG KONG: China’s yuan held steady despite US dollar strength on Friday, as the central bank continued to guide the currency with a firm fix.
The dollar was headed for a second straight weekly gain against major peers, buoyed by solid US economic data that supported the view the Federal Reserve can afford to wait a while longer before cutting interest rates again.
Prior to the market opening, the People’s Bank of China set the midpoint reference rate at 7.1498 per dollar. That was slightly weaker than Thursday’s fixing, which was the strongest since November last year, but was still 238 pips firmer than a Reuters’ estimate.
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 7.2928.
“Policymakers may be more confident after China posted solid Q2 growth of 5.2%,” DBS analysts wrote in a note on Friday.
Washington’s tone towards US-China trade has also noticeably softened this week, with the White House now reversing its stance and allowing Nvidia to resume sales of its less advanced AI chips to China, they added.
“Allowing a firmer RMB would also mean that currency issues would be less of a bugbear in trade negotiations with the US”
By 0316 GMT, the yuan was little changed at 7.1806 to the dollar. It has slipped 0.2% against the dollar this month, but has appreciated 1.7% so far this year.
Its offshore counterpart traded at 7.1835 yuan per dollar, up about 0.01% in Asian trade.
Comments
Comments are closed for this article.