China's yuan steady as US monetary policy in focus
- The Chinese currency was also flat for the week, as analysts say China’s central bank is happy to see low volatility in yuan trading
SHANGHAI: [China’s yuan held steady on Friday](https://China’s yuan steady as US monetary policy in focus), hovering around its strongest against the dollar in 3-1/2 years, as traders watch for fresh cues of future US monetary policies.
The Chinese currency was also flat for the week, as analysts say China’s central bank is happy to see low volatility in yuan trading.
The People’s Bank of China is turning to a more cautious stance, and the yuan “will probably not move a lot more in coming months,” Wei He, analyst at Gavekal Dragonomics, said in a note.
The onshore yuan changed hands at 6.7211 per dollar around lunch time, slightly weaker than the previous session’s close.
The dollar index was also steady.
The US Federal Reserve’s future policy path remains in focus. Fed officials shared on Thursday their ongoing concerns about the US inflation landscape, as central bankers gathered in Jackson Hole, Wyoming, for a closely watched economic symposium.
Guan Tao, chief economist at Huafu Securities, said that in the long run, investor confidence in the dollar will be dented by public debt risk concerns, if the US fiscal deficit continues to expand.
But in the short term, the dollar will likely oscillate as there are both positive and negative factors, the former Chinese forex regulator told the official Shanghai Securities News.
The yuan is trading around its firmest against the dollar since February 2023, but there are signs the PBOC has resisted market pressure for rapid appreciation, Gavekal Dragonomics’s He said.
“If the dollar weakens further, the PBOC will probably tolerate only gradual appreciation,” he said.
“Both the upside and downside risks for the renminbi are limited for now.”
Before trading started on Friday, the PBOC set the yuan’s guidance rate at 6.7811 per dollar.
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