China’s yuan edges higher as focus shifts to loan moves

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(Updates domestic closing price, adds analyst comments and references)

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SHANGHAI, Oct 13 (Businesshala) – China’s yuan edged higher against the dollar domestically on Wednesday, as investors digested upbeat export data and focused on whether the central bank matured later this week in the medium-term. will roll over the loans.

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Before the market opened, the People’s Bank of China pre-set the midpoint yuan rate at 6.4612 per dollar, weakening from the previous fix of 6.4447.

In the spot market, the onshore yuan opened at 6.4509 per dollar and touched 6.4449, ending at 6.4452, 20 pips stronger than the previous session.

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Currency traders said policy differences between China and other major economies would likely result in capital outflows and heap depreciation pressure on the yuan.

With rising hopes that the US Federal Reserve will soon ease pandemic-era stimulus, market participants are eager to see whether China’s central bank is due on Friday for 500 billion yuan ($77.53) of medium-term loans. Billion) rolls over.

“The amount of cash flow through MLF operations this Friday could suggest subsequent monetary policy operations,” said Jing Zhaopeng, a senior China strategist at ANZ.

“If the net fund injection is not huge, there is still a possibility of a reduction in the reserve requirement ratio (RRR) or targeted medium-term lending facility (TMLF) operations.”

The yuan was lowered in early trade by unexpectedly strong exports, as solid global demand eased some pressure on factories from power shortages and a resurgence of domestic COVID-19 cases.

The dollar hit a one-year high overnight as the US Federal Reserve eased its massive bond-buying program next month and concerns over rising energy prices.

Investors await US consumer price index data on Wednesday and retail sales data on Friday to provide further clues as to when the Fed may begin to roll out stimulus.

Three Fed policymakers said on Tuesday that the economy has recovered enough for the central bank to withdraw its massive support.

Separately, China said on Tuesday it would liberalize coal-fired electricity prices to tackle a worsening energy crisis that has curtailed production in various industries.

Investment bank CICC said higher electricity prices could push Chinese export prices somewhat higher in the medium term, and a reduction in the trade surplus could put some depreciation pressure on the renminbi exchange rate. ($1 = 6.4489 Chinese Yuan)

Reporting by Jason Xu, Winnie Zhou and Andrew Galbraith; Lincoln Feast and Ramakrishnan M.


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