SHANGHAI, March 13 (Reuters) - China's yuan jumped to a
near two-week high against an easing dollar on Monday, as the
local currency benefited a sudden shift in market expectations
towards the U.S. Federal Reserve slowing its pace of interest
rate rises.
The greenback slid following mixed U.S. jobs data
that showed slower wage growth, while authorities stepped in to
cap the fallout from the sudden collapse of Silicon Valley Bank . Investors now expect the Fed to take a less aggressive
monetary path. Goldman Sachs' analysts said they no longer expected the Fed
to deliver a rate hike at its March meeting and there was
considerable uncertainty about the path beyond March.
The prospect of the Fed being less hawkish put downward
pressure on the dollar.
Prior to market opening, the People's Bank of China (PBOC)
set the yuan's midpoint rate at 6.9375 per dollar,
280 pips or 0.4% firmer than the previous fix of 6.9655.
In the spot market, the onshore yuan opened at
6.9088 per dollar and at one point strengthened as far as
6.8662, the loftiest level since March 1.
By midday, it was changing hands at 6.8745, 450 pips firmer
than the previous late session close.
Imminent pressure for the yuan to weaken past 7 per dollar
has ebbed, said Ken Cheung, chief Asian FX strategist at Mizuho
Bank.
"Market projections for the scope of Fed's interest rate
hike in March have changed significantly, in addition to broad
risk-on sentiment," Cheung said.
"And China's monetary policy should remain stable as China
kept its central bank governor in his post."
Cheung added that investors would pay attention to U.S.
inflation data due on Tuesday for more clues on the health of
the world's largest economy.
Beijing surprised the market by keeping its central bank
governor and finance minister in their posts at the annual
session of the rubber-stamp parliament on Sunday, prioritising
continuity as economic challenges loomed at home and abroad.
By midday, the global dollar index fell to 103.801
from the previous close of 104.576, while the offshore yuan was trading at 6.8729 per dollar.
The one-year forward value for the offshore yuan traded at 6.7141 per dollar, implying a 2.37% appreciation
within 12 months.
The yuan market at 0344 GMT:
ONSHORE SPOT:
Item Current Previous Change
PBOC midpoint 6.9375 6.9655 0.40% Spot yuan 6.8745 6.9195 0.65% Divergence from -0.91%
midpoint*
Spot change YTD 0.37%
Spot change since 2005 20.39%
revaluation
Key indexes:
Item Current Previous Change
Dollar index 103.801 104.576 -0.7
*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 6.8729 0.02%
*
Offshore 6.705 3.47%
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 Li Gu, Winni Zhou and Brenda Goh; Editing by
Bradley Perrett)
Messaging: winni.zhou.thomsonreuters.com@reuters.net))
