The spot yuan opened at 6.8758 per dollar and was changing hands at 6.8769 at midday, 79 pips weaker than the previous late session close.
Currency traders said the dollar's movements should dominate the yuan's performance in the short term, while the domestic monetary policy stance and the pace of economic recovery could also affect sentiment. The PBOC bank ramped up liquidity injection when rolling over maturing medium-term policy loans for the fifth consecutive month on Monday, while keeping the interest rate unchanged, matching market expectations. The liquidity injection was smaller than a market consensus but higher than the amount maturing, suggesting the central bank is not particularly worried about the recovery of the economy, said Iris Pang, chief economist for Greater China at ING.
Global investors are also keeping an eye out for Tuesday's first-quarter gross domestic product (GDP) report to gauge the health of the world's second-largest economy after it reopened its borders. "While we are still waiting for the first-quarter GDP data due on Tuesday, the latest inflation and credit data for March have given us a first glimpse of China's uneven recovery," said Tommy Xie, head of Greater China research at OCBC Bank. Stronger-than-expected export data in March also suggested an "upside bias" to first-quarter GDP, Xie added. Meanwhile, the stronger dollar also undermined the yuan, after the Federal Reserve governor said on Friday that U.S. central bankers "haven't made much progress" in returning inflation to their 2% target and needed to move interest rates higher. By midday, the global dollar index rose to 101.689 from the previous close of 101.552.
The one-year forward value for the offshore yuan traded at 6.7113 per dollar, indicating a roughly 2.49% appreciation within 12 months. The yuan market at 0326 GMT:
ONSHORE SPOT:
Item Current Previous Change
PBOC midpoint 6.8679 6.8606 -0.11% Spot yuan 6.8769 6.869 -0.11% Divergence from 0.13%
midpoint*
Spot change YTD 0.34%
Spot change since 2005 20.35%
revaluation
Key indexes:
Item Current Previous Change
Dollar index 101.689 101.552 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 6.8785 -0.02%
*
Offshore 6.7083 2.38%
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 and Tom Westbrook)
