Yuan inches up, but makes little headway for week despite upbeat China data

SHANGHAI, April 19 (Reuters) - China's yuan inched up
against the U.S. dollar at midday on Friday, steadying somewhat
after the data-driven swings of the previous two sessions.
The Chinese currency leapt on Wednesday after a raft of
unexpectedly stronger-than-expected data suggested the slowing
economy may be starting to stabilise. It then slumped the next
day for its worst performance in two months as focus turned to
Sino-U.S. trade talks and as some investors took advantage to
buy the greenback on the cheap.
Traders expect the Chinese currency to remain in a tight
range over the near term, shackled by the yet-unresolved trade
war with the United States and a slowing global economy. A Wall
Street Journal report said on Thursday that a deal may be ready
to be signed by late May or early June.
Prior to market opening on Friday, the People's Bank of
China (PBOC) set the midpoint rate at 6.7043 per
dollar, weaker than the previous fix of 6.6911.
In the spot market, the onshore yuan opened at
6.7065 per dollar and was changing hands at 6.7020 at midday, 65
pips firmer than the previous late session close and 0.03
percent firmer than the midpoint.
If the yuan finishes the week at the midday level, it would
leave it largely flat for the week with a marginal 0.04 percent
gain on the dollar.
Traders said the 6.7 per dollar appeared to offer some
resistance, adding that there were very few catalysts due to the
closure of many overseas financial markets for the Good Friday
and Easter holidays. While currency markets remain open trading
volume is expected to be light.
Wang Tao, chief China economist at UBS in Hong Kong, expects
the yuan to trade in a range of 6.6 to 6.8 per dollar for the
rest of the year, saying that factors such as the recent dovish
turn of the Federal Reserve, a stabilising Chinese economy and
Sino-U.S. trade talks would influence markets.
"Should the USD weakens notably from here, we could see CNY
strengthening against the USD beyond 6.6, but unlikely beyond
6.5, while if the USD strengthens markedly, we expect the CNY to
weaken toward 7 but not beyond it in 2019," Wang said in a note.
The global dollar index was down at 97.403 at midday,
from the previous close of 97.474.
The offshore yuan was trading at 6.7018 per dollar
as of midday.

The yuan market at 0357 GMT:

ONSHORE SPOT:
Item Current Previous Change
PBOC midpoint 6.7043 6.6911 -0.20%

Spot yuan 6.702 6.7085 0.10%

Divergence from -0.03%
midpoint*
Spot change YTD 2.55%
Spot change since 2005 23.49%
revaluation

Key indexes:

Item Current Previous Change

Thomson 96.09 96.13 0.0
Reuters/HKEX
CNH index
Dollar index 97.403 97.474 -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 percent from official midpoint rate it sets each
morning.

OFFSHORE CNH MARKET

Instrument Current Difference
from onshore
Offshore spot yuan 6.7018 0.00%
*
Offshore 6.735 -0.46%
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 John Ruwitch
Editing by Shri Navaratnam)


2019-04-19 06:53:29

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