Spot yuan opened at 6.9300 per dollar and was changing hands at 6.9348 at midday, 60 pips weaker than the previous late session close. It earlier slipped to 6.9413, the lowest since March 10.
China's consumer price and producer price data reinforced the weakness in domestic demand highlighted in a string of other economic indicators, said Citi analysts. "Yuan could continue to underperform, especially on a trade-weighted basis, with a move towards the 98-figure by the China Foreign Exchange Trade System (CFETS) RMB index only a matter of time," said Maybank in a note.
Further weakening the yuan is the news that China had told its "big four" state-owned banks to reduce the ceiling on interest rates they pay on some deposits. UBS analysts said on Thursday that China government bond yields fell across the curve, extending declines following the deposit-rate news, adding that yields may have more downside risks. By midday, the global dollar index rose to 101.485 from the previous close of 101.477.
The offshore yuan was trading 84 pips away from the onshore spot at 6.9432 per dollar.
The one-year forward value for the offshore yuan traded at 6.7718 per dollar, indicating a roughly 2.53%
appreciation within 12 months.
The yuan market at 0255 GMT:
ONSHORE SPOT:
Item Current Previous Change
PBOC midpoint 6.9101 6.9299 0.29% Spot yuan 6.9348 6.9288 -0.09% Divergence from 0.36%
midpoint*
Spot change YTD -0.50%
Spot change since 2005 19.35%
revaluation
Key indexes:
Item Current Previous Change
Dollar index 101.485 101.477 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 6.9432 -0.12%
*
Offshore 6.7747 2.00%
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 Shri Navaratnam)
