SHANGHAI — China’s yuan eased against
the dollar on Monday after hitting its highest in over a week in
the previous session, as Beijing vowed to continue with its
strict zero-COVID strategy, dashing market hopes that some
restrictions could be eased soon.
Such market hopes had helped the onshore yuan
post its biggest daily gain in more than two years on Friday,
but the currency pared back some of those gains after health
officials said on Saturday China will persevere with its
“dynamic-clearing” approach to COVID-19 cases as soon as they
Downbeat trade data added to signs of a slowing economy,
also weighing on market sentiment.
“I think there are early signs that the zero-COVID policy
may be relaxed down the road, but the reopening will be a long
and gradual process,” said Zhiwei Zhang, chief economist at
Pinpoint Asset Management.
“The significant change of policies will likely to happen
next year rather than this year.”
Prior to market opening on Monday, the People’s Bank of
China (PBOC) set the midpoint rate at 7.2292 per
dollar, 263 pips or 0.36% firmer than the previous fix of
In the spot market, the onshore yuan slipped from
a high of an over one-week high of 7.17 per dollar hit on Friday
to trade at 7.2126 by midday, 199 pips weaker than the previous
late session close.
The government’s commitment to its zero-COVID strategy,
recent outbreaks across the country and downbeat economic data
have all hit the yuan, said a trader at a foreign bank.
China reported on Monday 5,496 new locally transmitted
COVID-19 cases for Nov. 6, the highest since May 2, when the
country’s commercial capital of Shanghai was put under a
crushing lockdown amid its worst outbreak.
Meanwhile, data showed exports and imports unexpectedly
contracting in October, the first simultaneous slump since May
2020, as surging inflation and rising interest rates hammered
global demand while new COVID-19 curbs at home disrupted output
“The trade figures bode ill on China Q4 growth outlook,”
said Ken Cheung, chief Asian FX strategist at Mizuho Bank.
“If investors remained fixating on the reopening trade, the
weak China data could be interpreted as positive news to
pressure China to tweak its COVID policy.”
By midday, the global dollar index rose to 111.036
from the previous close of 110.877, while the offshore yuan
was trading at 7.2176 per dollar.
The yuan market at 0400 GMT:
Item Current Previous Change
PBOC midpoint 7.2292 7.2555 0.36%
Spot yuan 7.2126 7.1927 -0.28%
Divergence from -0.23%
Spot change YTD -11.89%
Spot change since 2005 14.75%
Item Current Previous Change
Dollar index 111.036 110.877 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
OFFSHORE CNH MARKET
Instrument Current Difference
Offshore spot yuan 7.2176 -0.07%
Offshore 7.028 2.86%
*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 Ana Nicolaci da