China's yuan inches higher as PBOC sets firmer guidance
- The spot yuan was 0.1% higher at 6.6684 to the dollar
The yuan edged up against the dollar after China's central bank set a stronger midpoint, though a firmer dollar, driven by Federal Reserve rate hike bets, capped its gains.
- Factors influencing the yuan's daily fluctuations.
- Impact of Federal Reserve rate hike expectations on the dollar.
- China's measures to manage the yuan's strength for exporters.
HONG KONG: China’s yuan ticked up against the dollar on Thursday after the country’s central bank set a stronger daily midpoint, though gains were capped by a firmer greenback amid rising bets for a Federal Reserve rate hike.
The spot yuan was 0.1% higher at 6.6684 to the dollar as of 0323 GMT, after trading in a range of 6.6667 to 6.6718.
Before the market opened, the People’s Bank of China set the midpoint rate at 6.7174 per dollar, 377 pips weaker than a Reuters estimate, but firmer than 6.7191 per dollar in the previous session.
The spot yuan is allowed to trade 2% either side of a fixed midpoint each day.
While robust exports and corporate FX settlements provide a floor for the Chinese currency, a firmer dollar index in the near term “eased expectations of one-way yuan appreciation,” ICBC (Asia) research said in a note.
The dollar climbed to a 19-month high against its major peers on Thursday, as traders ramped up bets on further Fed tightening after stronger-than-expected October inflation data.
Meanwhile, China has stepped up a series of measures to moderate the rise of the yuan given a prolonged currency rally could squeeze exporters’ wafer-thin margins.
The yuan is down 0.2% against the dollar this month and is 4.9% firmer this year.
The offshore yuan traded at 6.6678 yuan per dollar, up about 0.09% in Asian trade.
The dollar’s six-currency index was 0.175% higher at 103.05.