The People's Bank of China set the midpoint rate at 6.9052 per dollar prior to market open, firmer than the previous fix at 6.9149. The spot rate is currently allowed to trade with a range 2% above or below the official fixing on any given day. "It is plausible that confidence can stabilise further if we do not have any more bank failures especially over coming days," said Christopher Wong, an FX strategist at OCBC Bank. The yuan's upside was capped, however, by investors' uncertainty over whether the banking sector turmoil would persuade the Federal Reserve to pause its interest rate increases, especially as the European Central Bank raised interest rates by 50 basis points (bps) on Thursday. "There are still concerns about U.S. interest rates staying higher for longer despite the ongoing banking sector turmoil," said Kirk Wong, global market & FX strategist at Everbright Securities International.
Investors are betting that the Fed will press on with its inflation-fighting campaign with a 25 bps hike that would lift the Fed's benchmark rate to a 4.75%-5% range. The global dollar index fell to 104.146 from the previous close of 104.418.
The offshore yuan was trading 0.02% away from the onshore spot at 6.8737 per dollar.
The one-year forward value for the offshore yuan traded at 6.7252 per dollar, indicating a roughly 2.21%
appreciation within 12 months.
The yuan market at 3:30AM GMT:
ONSHORE SPOT: Item Current Previous Change PBOC midpoint 0.14% 6.9052 6.9149
Spot yuan 0.36%
6.8752 6.8998
Divergence from
midpoint*
-0.43%
Spot change YTD
0.36%
Spot change since 2005
revaluation 20.38%
OFFSHORE CNH MARKET
Instrument Current Difference
from onshore
Offshore spot yuan
* 0.02%
6.8737
Offshore
non-deliverable 2.60%
forwards 6.7305
**
*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 Simon Cameron-Moore)
