The dollar fell from a seven-week high on Monday after a higher-than-expected drop in U.S. durable goods which dented some of the hawkishness built into U.S. interest rates. Prior to market opening, the People's Bank of China set the midpoint rate at 6.9519 per U.S. dollar, firmer than the previous fix 6.9572.
In the spot market, the yuan opened at 6.9515 per dollar and was changing hands at 6.9364 at midday, 69 pips firmer from the previous late session close. Maybank analysts said investors' focus could turn towards China's Purchasing Manager Index numbers this week followed by the country's annual parliamentary gatherings, where officials will release growth targets and policies. A Reuters poll for the PMI due on Wednesday showed factory activity was expected to show continued growth in February. "With the Chinese authorities focused on turning the economy around this year, (we) expect further stimulus and even evidence of economic recovery to boost yuan sentiment," Maybank analysts said in a note. There are also other signs suggesting the world's second largest economy is getting back on track after the scrapping of zero-COVID policies late last year.
A private survey showed new home sales rose sharply in February from a slump in the previous month, buoyed by a rise in demand in small and medium-sized cities after the scrapping of COVID curbs and supportive policies.
By midday, the global dollar index rose to 104.773
from the previous close of 104.673. The offshore yuan was trading at 6.9532 per dollar.
The yuan market at 4:13AM GMT:
ONSHORE SPOT: Item Current Previous Change PBOC midpoint 0.08% 6.9519 6.9572
Spot yuan 0.10%
6.9364 6.9433
Divergence from
midpoint*
-0.22%
Spot change YTD
-0.52%
Spot change since 2005
revaluation 19.32%
Key indexes:
Item Current Previous Change
Dollar index
104.773 0.1 104.673
*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% from official midpoint rate it sets each
morning.
OFFSHORE CNH MARKET
Instrument Current Difference
from onshore
Offshore spot yuan
* -0.24%
6.9532
Offshore
non-deliverable 2.59%
forwards 6.7765
**
*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 Simon
Cameron-Moore)
