The currency dipped despite data showing an unexpected rise
in China's outbound analysts in March, which analysts largely
attributed to base effects when compared with weak shipments in
the same period last year.
Spot yuan opened at 6.8750 per dollar and was
changing hands at 6.8733 at midday, 12 pips weaker than the
previous late session close and 0.11% away from the midpoint.
The People's Bank of China set the midpoint rate at 6.8658 per U.S. dollar prior to market open, firmer than the
previous fix 6.8854. The spot rate is allowed to trade with a
range 2% above or below the official fixing on any given day.
China's exports grew by 8.4% in the January-March period in
yuan terms from a year earlier, and imports grew by 0.2% over
the same period, customs data showed on Thursday.
While both figures pointed to an improvement from the previous January to February data, Lv Daliang, spokesman of the General Administration of Customs, told reporters on Thursday that weakening external demand and geopolitical factors will test China's trade outlook. "The strong export growth is unlikely to sustain given the weak global macro outlook. China still needs to rely more on domestic demand in the rest of the year," said Zhang Zhiwei, chief economist at Pinpoint Asset Management.
"I continue to expect supportive monetary and fiscal policies in the second quarter to boost growth," said Zhang.
The gloomy outlook painted by Lv resonated with the minutes from the Federal Reserve's March meeting released on Wednesday, which showed that several policymakers had forecast recent banking sector stress would tip the U.S. economy into a "mild recession", starting later this year.
Investors will be eyeing the release of China's first quarter gross domestic product, retail sales and industrial production data for March, all due out next week.
Until then "the yuan will likely trade in a tight range of
6.80 to 6.87. If the economic data due out next week give
further evidence of a sustained recovery, that could pave the
way for the yuan to rise to 6.7 (in the second quarter)," said
Kiyong Seong, lead Asia macro strategist at Societe Generale.
The global dollar index rose to 101.565 from the
previous close of 101.5.
The offshore yuan was trading 0.05% weaker than the onshore spot at 6.8767 per dollar. The one-year forward value for the offshore yuan traded at 6.7148 per dollar, indicating a roughly 2.41% appreciation within 12 months. The yuan market at 3:27AM GMT:
ONSHORE SPOT: Item Current Previous Change PBOC midpoint 0.29% 6.8658 6.8854
Spot yuan -0.02%
6.8733 6.8721
Divergence from
midpoint*
0.11%
Spot change YTD
0.39%
Spot change since 2005
revaluation 20.42%
Key indexes:
Item Current Previous Change
Dollar index
101.565 101.5 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
* -0.05%
6.8767
Offshore
non-deliverable 2.24%
forwards 6.7152
**
*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 Kim Coghill)
