HONG KONG: The yuan slid from a one-week high against the dollar on Thursday, after China reported a mixed bag of economic data and as investors awaited any hints of progress in trade talks between Washington and Beijing.
Growth in China's industrial output fell to a 17-year low in the first two months of 2019, but investment picked up speed as the government fast-tracked more road and rail projects, official data showed on Thursday.
Offering some hope of an end to the protracted Sino-U.S. trade war which has dampened global markets, U.S.
President Donald Trump said on Wednesday that a trade agreement with China could be finished ahead of a presidential summit. But the U.S. leader, who last month shelved plans to hike tariffs on Chinese goods, added that he is in no rush to complete such a deal, insisting on the inclusion of protection for intellectual property, a key sticking point, in the final agreement.
These mixed signals sent the yuan lower after opening at 6.7010 per dollar, its highest point since March 5, but kept the currency within a 100 basis-point range in morning trade.
Spot yuan was changing hands at 6.7110 per dollar at 0433 GMT, 40 pips weaker than the previous late session close and 0.15 weaker than the midpoint.
The People's Bank of China set the midpoint rate at 6.7009 per dollar prior to market open, firmer than the previous fix of 6.7114.
"There is nothing that indicates a clear direction right now," said a Shanghai-based trader with a foreign bank.
"It is all very opaque," a second trader in Shanghai at a Chinese bank said of U.S.-China negotiations. "The market does not know how the trade talks are going."
Adding to the confusion, the latest economic data do not fully reflect the health of the Chinese economy given seasonal distortions, said Carie Li, an economist at OCBC Wing Hang Bank in Hong Kong.
"We had Lunar New Year in February, so people will wait until they see the data from March to make a judgement call on the economic situation," she said.
Without clear drivers, the yuan may take a cue from global currency markets in the coming sessions, Li added.
The global dollar index rose to 96.632 from the previous close of 96.55.
The offshore yuan was down 0.23 percent at 6.7175 per dollar, trading 0.1 percent weaker than the onshore spot. The Thomson Reuters/HKEX Global CNH index, which tracks the offshore yuan against a basket of currencies on a daily basis, stood at 95.71, weaker than the previous day's 95.77.
Comments
Comments are closed for this article.