HONG KONG — China’s yuan firmed on
Tuesday, as investors cheered the easing of tensions in strained
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
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
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
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.
“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
Spot change YTD
Spot change since 2005
Item Current Previous Change
*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
* 7.049 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)