Yuan weakens against strong greenback, but fall limited by robust dollar selling

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    SHANGHAI, Nov 12 (Businesshala) - China's yuan weakened on Friday
against the greenback, which has strengthened on expectations of
further U.S. monetary tightening, but strong dollar selling by
Chinese exporters limited the yuan's fall.
    The yuan opened at 6.3950 per dollar and was
changing hands at 6.3960 at midday, 60 pips weaker than the
previous late session close, despite the People's Bank of China
setting a stronger midpoint rate at the open.  
    The dollar index, which measures the value of the
greenback against a basket of major world currencies, hit a
three-month high on Friday.
    The U.S. currency has been bolstered by bets the Federal
Reserve will tighten monetary policy further - including raising
interest rates next year - to tame inflation which could be
stickier the Fed expected.
    But China's widening trade surplus, and thus robust demand
for exporters to sell the dollar for the yuan, is underpinning
the Chinese currency, traders say. 
    "There's a flood of dollar-selling (from clients)," said a
trader at a Chinese bank, adding there are signs major state
banks are buying dollars to limit the yuan's rise.
    "China's trade surplus is exerting appreciation pressure on
the yuan," said the trader, who is not authorised to speak to
the media. 
    Yuan's fall is also limited by optimism of improving
Sino-U.S. ties. 
    U.S. President Joe Biden and Chinese leader Xi Jinping are
expected to hold a virtual summit on Monday, sources said, amid
tensions over trade, human rights and military activities.

    China's official yuan index, which measures the
value of the Chinese currency against a basket of currencies,
climbed to a nearly six-year high on Friday, having gained more
than 6% this year.      

    The yuan market at 0457 GMT: 
    
    ONSHORE SPOT:
 Item               Current  Previous  Change
 PBOC midpoint      6.4065   6.4145    0.12%
                                       
 Spot yuan          6.396    6.39      -0.09%
                                       
 Divergence from    -0.16%             
 midpoint*                             
 Spot change YTD                       2.07%
 Spot change since 2005                29.40%
 revaluation                           
 
    Key indexes:
     
 Item            Current     Previous  Change
                                       
 Thomson         101.2       100.92    0.3
 Businesshala/HKEX                          
 CNH index                             
 Dollar index    95.23       95.163    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    6.3915    0.07%
        *                        
 Offshore              6.5612    -2.36%
 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 Shanghai Newsroom; Editing by Lincoln Feast)
  
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