Chinese yuan heads for first monthly loss since July
- The yuan was 0.11% higher at 6.9053 per dollar
HONG KONG: China’s yuan edged higher against the dollar on Tuesday supported by strong manufacturing data, but remained on track for its first monthly decline since July as the Middle East conflict boosted demand for the safe-haven US currency.
The yuan was 0.11% higher at 6.9053 per dollar by 0300 GMT, after trading in a range of 6.9016 to 6.9070.
The currency found support after official data showed Chinese factory activity grew at the fastest pace in a year in March, helped by firm global demand.
Yet the yuan is down 0.7% against the dollar this month, set to snap a seven-month rally.
The dollar is poised to record its biggest monthly gain since July.
While the yuan outperformed other oil-sensitive Asian currencies for the month, analysts said the prolonged Middle East conflict could start to weigh on the currency given broader risk aversion.
Prior to the market opening, the People’s Bank of China set the midpoint rate at 6.9194 per dollar, 15 pips firmer than a Reuters estimate.
The spot yuan is allowed to trade 2% either side of the fixed midpoint each day.
“We look for USDCNY to consolidate into the summer given Middle East uncertainties and usual poor CNY seasonality,” Barclays analysts said in a note.
The offshore yuan changed hands at 6.911 yuan per dollar , up about 0.08% in Asian trade.
The US dollar index eased slightly to 100.39.
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