BEIJING: China's yuan surged to an all-time high against its major trading partners on Monday, while the spot prices were a tad weaker as investors expect more stimulus to underpin the economy after Beijing disclosed major economic targets for this year.
Prior to market opening, the People's Bank of China (PBOC) set the midpoint rate at 6.3478 per dollar, 190 pips or 0.3% weaker than the previous fix of 6.3288, the softest since Feb. 22.
However, the yuan's trade-weighted CFETS basket index rose to 106.07, the highest level since the index was introduced in early 2015, according to Reuters calculation based on official data.
Traders attributed the gains in the CFETS index to the yuan's resilience against a rising dollar amid heightened geopolitical tensions, whereas most emerging market currencies booked sizable losses.
In the spot market, onshore yuan opened at 6.3249 per dollar and was changing hands at 6.3221 at midday, 11 pips weaker than the previous late session close.
"China is likely to require a fair amount of policy supports to achieve this level of output and activity and some expectations for PBOC to ease probably contributed to the rise in the USD/CNH and USD/CNY this morning," analysts at Maybank said in a note, referring to major economic targets revealed in the government work report.
China on Saturday targeted an annual economic growth of around 5.5% this year as headwinds including an uncertain global recovery and a downturn in the country's vast property sector cast a pall on the world's second-largest economy.
Meanwhile, official data on Monday showed that China's export growth slowed in the January-February period due to the week-long Lunar New Year holiday and though the data beat expectations, while Russia's invasion of Ukraine has heightened uncertainty over the outlook for global trade this year.
"With the export growth slowing down, the pressure on the government rises further to loosen policies to achieve the ambitious growth target of 5.5%," said Zhiwei Zhang, chief economist at Pinpoint Asset Management.
By midday, the global dollar index rose to 98.923 from the previous close of 98.648, while the offshore yuan was trading -0.08 percent away from the onshore spot at 6.3269 per dollar.