AIRLINK 204.45 Increased By ▲ 3.55 (1.77%)
BOP 10.09 Decreased By ▼ -0.06 (-0.59%)
CNERGY 6.91 Increased By ▲ 0.03 (0.44%)
FCCL 34.83 Increased By ▲ 0.74 (2.17%)
FFL 17.21 Increased By ▲ 0.23 (1.35%)
FLYNG 24.52 Increased By ▲ 0.48 (2%)
HUBC 137.40 Increased By ▲ 5.70 (4.33%)
HUMNL 13.82 Increased By ▲ 0.06 (0.44%)
KEL 4.91 Increased By ▲ 0.10 (2.08%)
KOSM 6.70 No Change ▼ 0.00 (0%)
MLCF 44.31 Increased By ▲ 0.98 (2.26%)
OGDC 221.91 Increased By ▲ 3.16 (1.44%)
PACE 7.09 Increased By ▲ 0.11 (1.58%)
PAEL 42.97 Increased By ▲ 1.43 (3.44%)
PIAHCLA 17.08 Increased By ▲ 0.01 (0.06%)
PIBTL 8.59 Decreased By ▼ -0.06 (-0.69%)
POWER 9.02 Decreased By ▼ -0.09 (-0.99%)
PPL 190.60 Increased By ▲ 3.48 (1.86%)
PRL 43.04 Increased By ▲ 0.98 (2.33%)
PTC 25.04 Increased By ▲ 0.05 (0.2%)
SEARL 106.41 Increased By ▲ 6.11 (6.09%)
SILK 1.02 Increased By ▲ 0.01 (0.99%)
SSGC 42.91 Increased By ▲ 0.58 (1.37%)
SYM 18.31 Increased By ▲ 0.33 (1.84%)
TELE 9.14 Increased By ▲ 0.03 (0.33%)
TPLP 13.11 Increased By ▲ 0.18 (1.39%)
TRG 68.13 Decreased By ▼ -0.22 (-0.32%)
WAVESAPP 10.24 Decreased By ▼ -0.05 (-0.49%)
WTL 1.87 Increased By ▲ 0.01 (0.54%)
YOUW 4.09 Decreased By ▼ -0.04 (-0.97%)
BR100 12,137 Increased By 188.4 (1.58%)
BR30 37,146 Increased By 778.3 (2.14%)
KSE100 115,272 Increased By 1435.3 (1.26%)
KSE30 36,311 Increased By 549.3 (1.54%)
Markets

China's yuan near 2-month high as Fed, Biden stimulus drag on dollar

  • "China's solid macroeconomic fundamentals should continue to provide support for the currency," Matthew Ryan, senior market analyst at Ebury, said in a note.
Published April 29, 2021

SHANGHAI: China's yuan strengthened on Thursday to its firmest in nearly two months after the dollar slid to nine-week lows following a dovish outlook from the Federal Reserve and as the US president outlined a fresh $1.8 trillion stimulus plan.

President Joe Biden proposed his sweeping new plan in a speech to a joint session of Congress on Wednesday, including $1 trillion in spending on education and healthcare over 10 years and $800 billion in tax credits aimed at low- and middle-income families.

Biden's speech came after Fed Chairman Jerome Powell said on Wednesday that "it is not time yet" to begin discussing any change in policy after the US central bank left interest rates and its bond-buying programme unchanged.

"The impact from the Fed overnight is still very clear, the US dollar index's downward trend is extending and the yuan should rise," said a trader at a Chinese bank.

But in an indication that Sino-US tensions that have buffetted the yuan are far from over, Biden's speech took aim at China, pledging to maintain a strong US military presence in the Indo-Pacific and promising to boost technological development and trade.

A trader at a foreign bank said that China's currency would continue to follow the dollar's moves, and that the yuan still faced resistance at its January peak.

Before the market open, the People's Bank of China set the yuan's daily midpoint at 6.4715 per dollar, its firmest since March 3.

Guided by the higher fixing, spot yuan opened at 6.4745 per dollar and firmed to 6.4641, its strongest since March 3, before moderating to trade at 6.4716 by midday.

That was 73 pips stronger than Wednesday's late session close.

The offshore yuan firmed to 6.4625 per dollar, also its strongest level since March 3. By midday it had retreated to 6.4671 per dollar, still 86 pips stronger on the day.

The global dollar index stood at 90.588, up from the previous close of 90.532 but near late-February lows.

"China's solid macroeconomic fundamentals should continue to provide support for the currency," Matthew Ryan, senior market analyst at Ebury, said in a note.

"We are seeing a progressive internationalisation of the yuan, whereby it continues to account for a growing share of the world's trade and foreign exchange reserve assets, with CNY used increasingly for invoicing and payments.

The latter still accounts for much less than China's weight in global trade, suggesting room for growth and additional demand for the currency."

Comments

Comments are closed.