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China’s yuan slips on weak trade data, as govt reiterates zero-COVID policy

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SHANGHAI — China’s yuan eased against

the dollar on Monday after hitting its highest in over a week in

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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

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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

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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

and consumption.

“The trade figures bode ill on China Q4 growth outlook,”

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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%


Key indexes:

Item Current Previous Change

Thomson 0.0


CNH index

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



Instrument Current Difference

from onshore

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




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