Yuan heads for longest weekly winning streak against dollar in 13 years

HONG KONG: China’s yuan held a soft tone on Friday, but remained on track for its longest winning streak against the dollar in nearly 13 years buoyed by strong exports.

 By 0355 GMT, the yuan was 0.05% lower at 6.9396 to the dollar after trading in a range of 6.9390 to 6.9418.

Its offshore counterpart traded at 6.9388 yuan per dollar , up about 0.05% in Asian trade.

The yuan is now up 0.2% against the dollar this week, on track for its eleventh straight week of appreciation, the longest winning streak since early 2013. Analysts attributed the yuan’s resilience to a slew of positive factors, including a weak dollar, robust exports and seasonal demand.

“The FX conversions driven by favourable trends and seasonal holiday factors continue to support the RMB exchange rate,” analysts at ICBC said in a note.

 However, the pace of appreciation may slow against the backdrop of short-term rising US dollar volatility, holiday market closures and quieter trading activity, they said.

Prior to Friday’s market open, the People’s Bank of China set the midpoint rate at 6.9590 per dollar, 73 pips weaker than a Reuters estimate and easing further from the 32-month high set earlier this week.

 The spot yuan is allowed to trade 2% either side of the fixed midpoint each day.

Meanwhile, the CFETS US Dollar Lending Capital Sentiment Index, which measures onshore dollar liquidity conditions, hit the tightest level since August 2023 this week.

 Some traders attributed the tightness to onshore institutions needing to wire money offshore to meet margin calls amid recent volatility in precious metal markets.

The dollar index, which tracks the greenback against six major currencies, fell 0.1% to 97.85. The dollar is now poised for its strongest weekly performance since November as a rout in gold and silver, as well as stocks driven by AI-spending concerns, rattled investors.