Still, while the yuan crossed the psychologically important 6.9 to the dollar threshold, analysts said the movement was within the range they anticipated.
Prior to the market's opening, the People's Bank of China set the midpoint rate at 6.8835 per U.S. dollar, 83 pips weaker than the previous fix 6.8752.
Spot yuan opened at 6.8881 per dollar and was changing hands at 6.9031 at midday, 101 pips weaker than the previous late session close. The USD/CNH pair remains within the 6.81-6.93 range, said Maybank analysts. "This pair needs to break out of its recently established range for greater directional cues," they said.
Analysts from Barclays wrote in a note that "USD/CNY is likely to continue trading in its recent range of 6.80-6.90". They said that further weakening of the yuan could be capped by Chinese exporters' dollar sales as they look for rates of 6.92-6.95, based on the bank's interactions with clients. Barclays also sees room for a stronger yuan against the dollar, depending on the Fed's rate hike path and seasonal dividend payout conversion.
Market participants will monitor U.S. economic data coming out this week for clues on the Fed's monetary path ahead of their official meeting next week.
By midday, the global dollar index was steady at 101.816 compared with the previous close of 101.822.
The offshore yuan was trading 54 pips away from the onshore spot at 6.9085 per dollar.
The one-year forward value for the offshore yuan traded at 6.74 per dollar, indicating a roughly 2.50% appreciation within 12 months. The yuan market at 0400 GMT:
ONSHORE SPOT:
Item Current Previous Change
PBOC midpoint 6.8835 6.8752 -0.12% Spot yuan 6.9031 6.893 -0.15% Divergence from 0.28%
midpoint*
Spot change YTD -0.04%
Spot change since 2005 19.90%
revaluation
Key indexes:
Item Current Previous Change
Dollar index 101.816 101.822 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 6.9085 -0.08%
*
Offshore 6.743 2.08%
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; Editing by Kenneth
Maxwell)
