Yuan hovers near 4-year high as US midterms, Chinese regulator meeting in focus
- The spot yuan is allowed to trade a maximum of 2% either side of the fixed midpoint each day
China's yuan hovers near a four-year high as the central bank manages its appreciation and injects cash to support the economy, while global markets await US midterm election results.
- Yuan's near four-year high against the dollar.
- PBOC's strategy for managing yuan appreciation.
- China's central bank measures to support the economy.
SHANGHAI: China’s yuan hovered near a more-than-four-year high against the dollar on Monday, as investors turned their attention to this week’s US midterm elections for possible impact on global financial markets.
Domestic market participants awaited possible official policy measures to support the market after China’s blue-chip stocks posted their worst monthly performance in more than a decade last month.
Prior to the market opening, the People’s Bank of China (PBOC) set the midpoint rate at 6.7146 per dollar, 521 pips weaker than a Reuters estimate of 6.6625.
The spot yuan is allowed to trade a maximum of 2% either side of the fixed midpoint each day.
The central bank has been gradually strengthening its daily yuan official guidance this year, but at levels weaker than market expectations, suggesting it is seeking to manage the pace of appreciation, traders and analysts said.
“Regardless of the global market backdrop, the trend of CNY appreciation remains intact,” analysts at ANZ said in a note.
“Chinese authorities are setting stronger fixings and are not pushing back against the strengthening path.”
They said with China set to host the APEC Economic Leaders’ Meeting later this month, they expect “the ongoing yuan appreciation to continue”.
In the spot market, the onshore yuan was up 0.01% at 6.6551 per dollar as of 0249 GMT, not far from a more-than-four-year high of 6.6523 hit on Friday.
Its offshore counterpart traded at 6.6529 yuan per dollar, also up about 0.01% in Asian trade.
Separately, China’s central bank injected cash into the banking system on Monday, as it formally shifted its main policy rate to an overnight lending rate, a move analysts said would ease funding conditions and support the economy.
In global markets, the dollar and other major currencies were in a holding pattern as investors monitored the outcome of this week’s US midterm elections, which could shift the balance of power in Congress and control over the federal purse strings.