In the spot market, the yuan opened at 6.8931 per dollar and was changing hands at 6.9028 at midday, 39 pips firmer from the previous late session close. China's February new home prices rose at the fastest pace since July 2021, official data showed on Thursday, following previous indicators showing much narrower declines in home sales, developer investment and construction starts, suggesting the real estate sector was stabilising. "The stabilising China property market should help anchor expectations for China reopening trade and support the RMB (yuan) as well," said Ken Cheung, Chief Asian FX Strategist at Mizuho Bank.
Goldman Sachs has raised its forecast for China's gross domestic product (GDP) growth this year to 6% from 5.5% on the back of the country's rapid reopening and improved activity in the real estate sector, the investment bank said in a note on Wednesday. Safe-haven currencies like the U.S. dollar and the yen were in demand on renewed fears of a global banking crisis, after contagion from the collapse of U.S.-based Silicon Valley Bank spread across the Atlantic to Swiss bank Credit Suisse.
Investors were also cautiously waiting for the Fed's decision on interest rates next week.
"Let's see how things will unfold at Credit Suisse. I expect it will be difficult for the Federal Reserve to continue large-scale rate hikes, and I am still bullish on the yuan," said a trader at a Chinese bank. Goldman Sachs lowered its terminal rate forecast to 5.25% to 5.5% after removing a rate hike in March on the back of recent stresses in the U.S. banking system.
The global dollar index fell to 104.498 from the previous close of 104.646. The offshore yuan was trading at 6.9009 per dollar.
The yuan market at 4:36AM GMT:
ONSHORE SPOT: Item Current Previous Change PBOC midpoint 6.868 -0.68% 6.9149
Spot yuan 0.06%
6.9028 6.9067
Divergence from
midpoint*
-0.17%
Spot change YTD
-0.04%
Spot change since 2005
revaluation 19.90%
Key indexes:
Item Current Previous Change
Dollar index
104.498 -0.1 104.646
*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
* 0.03%
6.9009
Offshore
non-deliverable 2.23%
forwards 6.7638
**
*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 Jason Xue and Brenda Goh; Editing by Jamie Freed)
