Yuan buoyed by prospects for improved Sino-U.S. ties

- Advertisement -


    SHANGHAI, Sept 27 (Businesshala) - China's yuan recovered on
Monday, bouncing from a near one-week low against the dollar hit
last week, as the market pinned its hopes on positive
developments over the weekend that could lead to better
Sino-U.S. relations.
    Huawei Technologies Co's Chief Financial Officer Meng
Wanzhou flew back to China on Friday after reaching an agreement
with U.S. prosecutors to end a bank fraud case against her.
    The release of Meng is an opportunity for a reboot of
bilateral relations with the United States and Canada but "toxic
political rhetoric" could still "poison" the atmosphere, the
state-backed Chinese Newspaper Global Times said on
Monday.
    "Some positive soundbites and actions on the Sino-U.S.
relations front over the weekend, giving more hope for a
positive turn after the USTR's trade policy review. This could
be a further positive for the RMB," Terence Wu, FX strategist at
OCBC Bank, said in a note.
    Prior to market opening, the People's Bank of China (PBOC)
set the midpoint rate at 6.4695 per dollar, 96 pips
or 0.15% weaker than the previous fix of 6.4599. 
    In the spot market, onshore yuan opened at 6.4575
per dollar and was changing hands at 6.4572 around midday, 97
pips firmer than the previous late session close. The spot price
touched a low of 6.4737 last week, the weakest since Aug. 27.
    Several currency traders said the news of Meng's return to
China lifted market sentiment, but whether the strength in the
yuan would be sustainable largely depends on follow-up measures
including trade tariff reductions.
    Fears of widespread contagion from China Evergrande Group's
 debt troubles receded somewhat, with the market's
focus shifting to a power crunch in China. Industrial production
in several provinces has been hit by power supply shortages,
according to media reports.
    "There might be implications for global inflation ... and
monetary policies," said Lu Ting, chief China economist at
Nomura.
    "We guess China's supply shock will very likely result in a
shortage of goods for the Thanksgiving and Christmas shopping
season and will likely further push up global CPI inflation,
especially in (developed market) countries."
    The Japanese investment bank cut its 2021 economic growth
forecast for China to 7.7% from 8.2% previously. 
    China's National Energy Administration has told coal and
natural gas companies to increase their output to ensure the
country has sufficient energy supplies to keep homes warm during
winter, the regulator said on Sunday.
    Around midday, the global dollar index fell to 93.217
from the previous close of 93.268, while the offshore yuan
 was trading at 6.4564 per dollar. 

    The yuan market at 0344 GMT: 
    
    ONSHORE SPOT:
 Item               Current  Previous  Change
 PBOC midpoint      6.4695   6.4599    -0.15%
                                       
 Spot yuan          6.4572   6.4669    0.15%
                                       
 Divergence from    -0.19%             
 midpoint*                             
 Spot change YTD                       1.10%
 Spot change since 2005                28.17%
 revaluation                           
 
    Key indexes:
     
 Item            Current     Previous  Change
                                       
 Thomson         99.3        99.13     0.2
 Businesshala/HKEX                          
 CNH index                             
 Dollar index    93.217      93.268    -0.1
 
*Divergence of the dollar/yuan exchange rate. Negative number
indicates that spot yuan is trading stronger than the midpoint.
The People's Bank of China (PBOC) allows the exchange rate to
rise or fall 2% from official midpoint rate it sets each
morning.

    OFFSHORE CNH MARKET   
  
 Instrument            Current   Difference
                                 from onshore
 Offshore spot yuan    6.4564    0.01%
        *                        
 Offshore              6.6385    -2.55%
 non-deliverable                 
 forwards                        
               **                
 
*Premium for offshore spot over onshore
**Figure reflects difference from PBOC's official midpoint,
since non-deliverable forwards are settled against the midpoint.
. 

 (Reporting by Winni Zhou and Andrew Galbraith; Editing by
Jacqueline Wong)
  
- Advertisement -

- Advertisement -

.

- Advertisement -

Stay on top - Get the daily news in your inbox

DMCA / Correction Notice

Recent Articles

Related Stories

Stay on top - Get the daily news in your inbox