SHANGHAI, April 25 (Reuters) - China's yuan slipped
against the dollar but held near a key threshold on Tuesday, as
investors awaited a top policymakers meeting this week for clues
on the currency's direction.
Traders said market participants maintained a rough
range of 6.85 to 6.9 per dollar and appeared unwilling to break
the boundary ahead of the quarterly Politburo meeting this week,
when a top decision-making body of the Communist Party discusses
the economy.
"While gross domestic product (GDP) rebounded in Q1, we
expect the Politburo meeting to take a cautious view of growth
given the lingering concerns about the sustainability of the
housing and consumption recoveries," economists at Barclays said
in a note, adding that macroeconomic policy was likely to stay
accommodative to sustain the recovery.
Sources told Reuters that China nudged banks this month to
cut deposit interest rates further, the latest effort to channel
vast savings into spending and more productive investment.
Prior to market opening, the People's Bank of China (PBOC)
set the midpoint rate at 6.8847 per dollar, 12 pips
weaker than the previous fix of 6.8835.
In the spot market, the onshore yuan opened at
6.8900 per dollar and was changing hands at 6.8999 at midday, 52
pips weaker than the previous late session close.
Traders said the psychologically important 6.9 per dollar
continued to offer strong support, as investors pay close
attention to China's manufacturing activity data due on Sunday
and the upcoming Federal Reserve policy meeting before making
big bets on the local currency.
"If domestic economic data continues to improve, the yuan is
likely to gradually appreciate," said a trader at a Chinese
bank.
Other market participants said the U.S. monetary
tightening trajectory remained a key market focus, which could
bring volatility to the dollar and other major currencies.
Markets widely expect the Fed to raise rates by another 25
bps at next week's meeting, but they are seen pausing
in June. By midday, the global dollar index fell to 101.315
from the previous close of 101.348, while the offshore yuan was trading at 6.9074 per dollar.
The one-year forward value for the offshore yuan traded at 6.7399 per dollar, indicating a 2.49% appreciation
within 12 months.
The yuan market at 0256 GMT:
ONSHORE SPOT:
Item Current Previous Change
PBOC midpoint 6.8847 6.8835 -0.02% Spot yuan 6.8999 6.8947 -0.08% Divergence from 0.22%
midpoint*
Spot change YTD 0.00%
Spot change since 2005 19.95%
revaluation
Key indexes:
Item Current Previous Change
Dollar index 101.315 101.348 0.0
*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 6.9074 -0.11%
*
Offshore 6.7456 2.06%
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 Shanghai Newsroom; Editing by Sam Holmes)
