SHANGHAI: China’s yuan held largely steady against the US dollar on Friday, as investors adopted a cautious approach heading into the weekend amid the backdrop of persistent tensions with the United States over trade, tech and geopolitics.
The onshore yuan changed hands near 7.1240 per dollar at midday, slightly stronger than the previous close.
The yuan has firmed more than 2% against the dollar so far this year on policy guidance and expectations of further interest rate cuts by the US Federal Reserve.
But further strengthening “needs continuous improvement in internal and external conditions,” Nanhua Futures said in a note to clients.
“Otherwise, the yuan’s appreciation is not sustainable.”
Overall, yuan optimism is being challenged by the prolonged US-China economic and geopolitical tensions.
On Thursday, China dramatically expanded its rare earths export controls, as Beijing tightens its hold over the sector ahead of talks between Presidents Donald Trump and Xi Jinping.
Adding to the tense relationship between the superpowers, the US imposed sanctions on about 100 individuals, entities and vessels, including a Chinese independent refinery and terminal, that helped Iran’s oil and petrochemicals trade.
Domestically, traders will be looking to data to be released next week on new bank loan issuance in China to gauge credit and overall demand in the economy.
A Reuters poll showed that lending likely more than doubled in September, possibly lifted by seasonal factors even as slowing government financing and weak demand dragged on growth.
Prior to the market opening, the People’s Bank of China set the midpoint rate at 7.1048 per dollar, its strongest since September 17.
The guidance rate is 281 pips firmer than a Reuters’ estimate, reflecting authorities’ desire to keep the yuan steady.
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