Home Business Yuan firms as U.S., China leaders’ dialog eases economic concerns

Yuan firms as U.S., China leaders’ dialog eases economic concerns

9 min read
Comments Off on Yuan firms as U.S., China leaders’ dialog eases economic concerns

Article content

HONG KONG — China’s yuan firmed on

Tuesday, as investors cheered the easing of tensions in strained

Article content

U.S.-China relations after a meeting of the heads of the world’s

top two economies on the sidelines of the G20 Summit.

It also helped to temper broader concerns about a

stuttering Chinese economyunderscoreded by fresh data released

earlier in the day, and kept the yuan on track to extend gains

for the fourth day against the greenback.

The People’s Bank of China set the midpoint rate

Advertisement 2

Article content

at 7.0421 per dollar prior to market open, firmer than the

previous fix 7.0899.

The spot market opened at 7.0400 per dollar and

was changing hands at 7.0506 at midday, 204 pips firmer than the

previous late session close and 0.12% softer from the midpoint.

The spot rate is currently allowed to trade with a range 2

percent above or below the official fixing on any given day.

“The meeting between Chinese President Xi Jinping and U.S.

President Joe Biden at the side of the G20 Summit cooled cold

war fears,” DBS senior FX strategist Philip Wee and senior

economist Radhika Rao wrote in a client note.

At the sidelines of the G20 Summit in Bali, Indonesia, both

Xi and Biden pledged more frequent communications and agreed

that U.S. Secretary of State Anthony Blinken will travel to

Advertisement 3

Article content

Beijing for follow-up talks.

China and the United States have clashed over a range of

issues, spanning trade, technology and Taiwan, which Beijing

considers its own territory.

“With communication channels restarted, this should be taken

as a positive outcome for the meeting,” said Maybank analyst

Saktiandi Supaat.

Back home, however, a raft of weak Chinese data released

earlier, including factory output, retail sales and property

investment highlighted the challenges for policymakers.

The gloomy data capped gains in the onshore yuan, which rose

to a near two-month high against the dollar Monday, bolstered by

Beijing’s move to help the embattled property sector and ease

some of the country’s strict COVID-19 containment measures.

Advertisement 4

Article content

“The weakening China hard data for October poured cold water

on buoyant sentiment driven by the pivots on the COVID and

property policies,” said Ken Cheung, chief Asian FX strategist

at Mizuho Bank.

The offshore yuan was trading 0.02 percent away

from the onshore spot at 7.049 per dollar.

Offshore one-year non-deliverable forwards contracts

(NDFs), considered the best available proxy for

forward-looking market expectations of the yuan’s value, traded

at 6.877, 2.40 percent away from the midpoint.

One-year NDFs are settled against the midpoint, not the spot


The global dollar index rose to 106.975 from the

previous close of 106.66.

The yuan market at 4:37AM GMT:


Item Current Previous Change

Advertisement 5

Article content

PBOC midpoint


7.0421 7.0899

Spot yuan

7.071 0.29%


Divergence from



Spot change YTD


Spot change since 2005

revaluation 17.39%

Key indexes:

Item Current Previous Change


Reuters/HKEX 0.0

CNH index

Dollar index

107.017 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



Instrument Current Difference

from onshore

Offshore spot yuan

* 7.049 0.02%


non-deliverable 6.877 2.40%



*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 Georgina Lee

Editing by Shri Navaratnam)



Postmedia is committed to maintaining a lively but civil forum for discussion and encourage all readers to share their views on our articles. Comments may take up to an hour for moderation before appearing on the site. We ask you to keep your comments relevant and respectful. We have enabled email notifications—you will now receive an email if you receive a reply to your comment, there is an update to a comment thread you follow or if a user you follow comments. Visit our Community Guidelines for more information and details on how to adjust your email settings.

Source link

Load More Related Articles
Load More By 
Load More In Business
Comments are closed.

Check Also

Chelsea Handler ‘Didn’t Know’ She Was on Ozempic

Getty Images Ozempic is the controversial diet drug that’s the talk of TikTok and Tinselto…