AGL 40.00 No Change ▼ 0.00 (0%)
AIRLINK 129.00 Decreased By ▼ -0.53 (-0.41%)
BOP 6.76 Increased By ▲ 0.08 (1.2%)
CNERGY 4.50 Decreased By ▼ -0.13 (-2.81%)
DCL 8.70 Decreased By ▼ -0.24 (-2.68%)
DFML 41.00 Decreased By ▼ -0.69 (-1.66%)
DGKC 81.30 Decreased By ▼ -2.47 (-2.95%)
FCCL 32.68 Decreased By ▼ -0.09 (-0.27%)
FFBL 74.25 Decreased By ▼ -1.22 (-1.62%)
FFL 11.75 Increased By ▲ 0.28 (2.44%)
HUBC 110.03 Decreased By ▼ -0.52 (-0.47%)
HUMNL 13.80 Decreased By ▼ -0.76 (-5.22%)
KEL 5.29 Decreased By ▼ -0.10 (-1.86%)
KOSM 7.63 Decreased By ▼ -0.77 (-9.17%)
MLCF 38.35 Decreased By ▼ -1.44 (-3.62%)
NBP 63.70 Increased By ▲ 3.41 (5.66%)
OGDC 194.88 Decreased By ▼ -4.78 (-2.39%)
PAEL 25.75 Decreased By ▼ -0.90 (-3.38%)
PIBTL 7.37 Decreased By ▼ -0.29 (-3.79%)
PPL 155.74 Decreased By ▼ -2.18 (-1.38%)
PRL 25.70 Decreased By ▼ -1.03 (-3.85%)
PTC 17.56 Decreased By ▼ -0.90 (-4.88%)
SEARL 78.71 Decreased By ▼ -3.73 (-4.52%)
TELE 7.88 Decreased By ▼ -0.43 (-5.17%)
TOMCL 33.61 Decreased By ▼ -0.90 (-2.61%)
TPLP 8.41 Decreased By ▼ -0.65 (-7.17%)
TREET 16.26 Decreased By ▼ -1.21 (-6.93%)
TRG 58.60 Decreased By ▼ -2.72 (-4.44%)
UNITY 27.51 Increased By ▲ 0.08 (0.29%)
WTL 1.41 Increased By ▲ 0.03 (2.17%)
BR100 10,450 Increased By 43.4 (0.42%)
BR30 31,209 Decreased By -504.2 (-1.59%)
KSE100 97,798 Increased By 469.8 (0.48%)
KSE30 30,481 Increased By 288.3 (0.95%)

SHANGHAI: China’s yuan inched up slightly against the dollar on Wednesday, gaining a foothold following recent volatility as market participants looked for clues about official attitudes towards foreign exchange policy.

COVID-19 lockdowns in dozens of Chinese cities and the narrowing yield advantage against other major economies have weighed heavily on the yuan, pushing it to a one-year low earlier this week. It has since come off that low after the central bank cut the amount of foreign exchange banks must keep in reserve.

Market participants are now looking for the “red line” at which authorities would welcome a cheaper yuan to underpin and economic recovery while also keeping capital outflows under control.

“A weaker CNY would help alleviate pressure on China’s economy and boost export competitiveness amid stronger external competition, at a time when domestic monetary policy is constrained by a hawkish Federal Reserve,” analysts at Standard Chartered said in a note.

Standard Chartered revised its forecast for the yuan to trade at 6.7 per dollar at end of the second quarter, weaker than 6.35 previously.

Prior to the market opening, the People’s Bank of China (PBOC) set the midpoint rate at a fresh two-year low of 6.5598 per dollar, 8 pips weaker than the previous fix 6.559, but 16 pips firmer than Reuters’ estimate of 6.5614.

Yuan jumps after China’s central bank moves to slow currency’s slide

Apart from the FX RRR reduction, the central bank has not yet expressed any signs of discomfort over recent yuan weakness, with official guidance rates this week mostly in line with market projections, traders said.

In the spot market, the onshore yuan opened at 6.5595 per dollar and was changing hands at 6.5559 at midday, 21 pips firmer than the previous late session close.

Several market analysts and traders said the FX RRR reduction should keep the yuan well above the psychologically important 6.6 per dollar for now, while the US Federal Reserve’s anticipated interest rate hike in May could revive weakness in the Chinese currency.

“As long as the monetary policy divergences continue to widen here, the yuan should continue to weaken and we target the November 2020 high (for USD/CNY) near 6.75,” said Win Thin, global head of currency strategy at Brown Brothers Harriman.

By midday, the global dollar index rose to 102.347 from the previous close of 102.303, while the offshore yuan was trading at 6.5851 per dollar.

Comments

Comments are closed.