China's yuan rebounds as PBOC lifts midpoint, dollar falls after Democrats take Congress
- The spot yuan was 0.09% higher at 6.6698 to the dollar as of 0318 GMT, after trading in a range of 6.6680 to 6.6727
China's yuan bounced against the dollar due to the central bank's midpoint rate hike and a weaker dollar post-US midterm elections, recovering from earlier RRR-induced pressure.
- PBOC's midpoint rate adjustment and yuan's rebound.
- Impact of US midterm elections on the dollar and yuan.
- China's foreign-exchange reserve requirement ratio hike.
HONG KONG: China’s yuan bounced from a more than a two-week low against the dollar on Thursday, as the central bank lifted its midpoint rate and the greenback weakened as Democrats captured control of Congress in US midterm elections.
The currency had come under pressure earlier this week after China’s move to raise the foreign-exchange reserve requirement ratio (RRR) tempered the yuan’s rally.
The spot yuan was 0.09% higher at 6.6698 to the dollar as of 0318 GMT, after trading in a range of 6.6680 to 6.6727.
Prior to the market opening, official yuan guidance was strengthened for the first time in four days.
The People’s Bank of China set the midpoint rate at 6.7156 per dollar, 373 pips weaker than a Reuters’ estimate.
The spot yuan is allowed to trade 2% either side of the fixed midpoint each day.
Dollar weakness following the Democrats’ sweeping victory in
US midterm elections, which removed a major source of political uncertainty, also buoyed Asian currencies, including the yuan.
“The trend of yuan appreciation remains unchanged, but the pace will moderate,” Citic Securities in a note, referring to
the central bank’s decision to raise the foreign exchange RRR.
The yuan is down 0.2% against the dollar this month, but up 4.9% this year.
The offshore yuan traded at 6.6675 yuan per dollar, up about 0.11% in Asian trade.
The dollar’s six-currency index was 0.207% lower at 101.26.