Yuan edges up as dollar wavers on Iran ceasefire uncertainty

HONG KONG: China’s yuan was a bit firmer against the U.S. dollar on Wednesday as the greenback wavered on Middle East ceasefire uncertainty, while domestic corporate settlement needs continued to lend support.

By 0305 GMT, the yuan was 0.12% higher at 6.8237 to the dollar.

The offshore yuan traded at 6.8249 yuan per dollar, up about 0.06% in Asian trade.

US President Donald Trump said he would indefinitely extend the ceasefire with Iran to allow for further peace talks, but it was not clear on Wednesday if Iran or Israel would agree, leaving markets on edge.

The dollar index, which measures the greenback’s strength against a basket of six currencies, hovered near the 98 level in early Asian trading, and has given up most of its safe-haven premium since the Iran war began in late February.

“We expect limited further downside for the dollar index in the short term, but domestic corporate settlement trends will keep the RMB relatively strong,” analysts at Ping An Securities wrote in a note.

“We anticipate the RMB still has some appreciation potential and will watch its performance around the 6.8 level.”    

Prior to the market opening, the People’s Bank of China set the midpoint rate at 6.8635 per dollar, off the one-week high seen on Tuesday and 402 pips weaker than a Reuters’ estimate.

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

Elsewhere, pan-African lender Ecobank is in talks with Bank of China to launch a direct local-currency-to-yuan settlement product for its customers by year end, its group CEO said, citing rising trade and commercial ties between Africa and China.