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China’s yuan touches 10-day low as COVID-19 numbers hurt sentiment

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SHANGHAI — China’s yuan eased to a

10-day low against the dollar on Monday, as worsening COVID-19

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infection numbers across the country and fresh mobility

restrictions dented market sentiment.

Official data showed that China had 27,095 new COVID

infections on Nov. 20, the most in more than seven months.

Beijing’s most populous district urged residents to stay at

home on Monday, extending a request from the weekend as the

city’s COVID-19 case numbers rose. Many businesses in the

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district were shut and schools shifted classes online.

While an easing of pandemic-control measures had been a

positive development, the near-term challenge was containing

rising case numbers, Lin Li, head of global markets research for

Asia at MUFG Bank, wrote in a note to clients.

COVID disruptions were among key factors weighing on the

health of the world’s second largest economy, which

fundamentally affects the currency, traders said.

Prior to market opening, the People’s Bank of China (PBOC)

set the midpoint rate at a 10-day low of 7.1256 per

dollar, 165 pips or 0.23% weaker than the previous fix, 7.1091.

In the spot market, the onshore yuan opened at

7.1451 per dollar and weakened to a low of 7.1708, the softest

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level since Nov. 11. By midday, it was changing hands at 7.1616,

456 pips weaker than the previous late session close.

Traders said the market had become cautious due to recent

domestic COVID developments, while future interest rate rises by

Federal Reserve are back in focus, supporting the dollar.

“Markets will also closely monitor U.S. economic data to

gauge the Fed’s tightening trajectory and the dollar’s

movements,” said a trader at a foreign bank.

Investors will be keenly interested in minutes from the

Fed’s November meeting due to be released on Wednesday, which

could shed light on how far officials ultimately expect to raise

interest rates.

Around midday, the global dollar index had risen to

107.254 from the previous close of 106.93, while the offshore

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yuan was trading at 7.1666 per dollar.

The yuan market at 0304 GMT:

ONSHORE SPOT:

Item Current Previous Change

PBOC midpoint 7.1256 7.1091 -0.23%

Spot yuan 7.1616 7.116 -0.64%

Divergence from 0.51%

midpoint*

Spot change YTD -11.26%

Spot change since 2005 15.57%

revaluation

Key indexes:

Item Current Previous Change

Thomson 0.0

Reuters/HKEX

CNH index

Dollar index 107.254 106.93 0.3

*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 7.1666 -0.07%

*

Offshore 6.997 1.84%

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 Brenda Goh)

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