The yuan closed down against the dollar on Monday, even though the People's Bank of China set a slightly firmer mid-point due to dollar demand for trade settlement and profit-taking after the yuan hit a series of record highs in the past two weeks. Spot yuan ended at 6.4013 per dollar, weaker than 6.3930 at the close on Friday. It has now appreciated 6.64 percent since it was depegged from the dollar in June 2010 and 2.94 percent so far this year.
The PBOC surprised the market last week by letting the yuan rise at its fastest weekly pace since the global financial crisis in 2008, sparking speculation that China might widen the yuan's trading band, use the currency as a key tool to fight inflation or let it appreciate versus a trade-weighted basket.
It fixed the mid-point slightly stronger at 6.3997 on Monday, up slightly from Friday's 6.4032. The fixing is the central bank's base rate from which the yuan can move 0.5 percent in either direction. Offshore, the one-year dollar/yuan non-deliverable forwards (NDFs) were bid at 6.2810 in late trade, up from 6.2770 at Friday's close. Their implied yuan rise in a year's time rose to 1.89 percent from 1.95 percent.
Comments
Comments are closed.