Prior to market opening, the People's Bank of China (PBOC) set the midpoint rate at 6.8764 per dollar, 74 pips firmer than the previous fix of 6.8838.
In the spot market, the onshore yuan opened at 6.8813 per dollar and was changing hands at 6.8768 at midday, 118 pips weaker than the previous late session close. Trading was thin on Monday as many overseas markets remained closed for the Easter Monday holiday.
The onshore yuan swung in a range of 80 pips in morning deals, while volume stood at $10.2 billion around midday, compared with a normal half-day volume of about $15 billion. "The consolidation mode continued due to lack of catalyst," said Tommy Xie, head of Greater China research at OCBC Bank. "The pace of RMB movement in the near term may still depend on the dollar movement." Currency traders said investors refrained from betting on a stronger yuan for the time being due largely to expectations of a widening yield gap between China and the United States. "Markets will also need more domestic economic data to show the pace of recovery," a trader at a foreign bank said. China is due to report March credit lending, trade and inflation data later this week and first quarter gross domestic product (GDP) and activity indicators next week. Currency traders widely believe these figures could offer a more comprehensive picture of the broad domestic economy. By midday, the global dollar index rose to 102.19 from the previous close of 102.092, while the offshore yuan was trading at 6.8782 per dollar.
The one-year forward value for the offshore yuan traded at 6.7259 per dollar, indicating a 2.26% appreciation within 12 months.
The yuan market at 0353 GMT:
ONSHORE SPOT:
Item Current Previous Change
PBOC midpoint 6.8764 6.8838 0.11% Spot yuan 6.8768 6.865 -0.17% Divergence from 0.01%
midpoint*
Spot change YTD 0.34%
Spot change since 2005 20.35%
revaluation
Key indexes:
Item Current Previous Change
Dollar index 102.19 102.092 0.1
*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 6.8782 -0.02%
*
Offshore 6.7248 2.25%
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 Winni Zhou and Tom Westbrook; Editing by
Jacqueline Wong)
