China's yuan reversed earlier weakness to hit a post-revaluation high against the dollar for the fourth straight day on Tuesday, after a few yuan-buying deals in the last 20 minutes of trade.
The yuan closed at its intra-day high of 7.8400, up from 7.8436 at the close on Monday, when it hit an intra-day high of 7.8410. "Some banks bought the yuan late in the session, apparently betting the yuan will rise further in the near term as the dollar is weakening on global markets," said a dealer at a European bank in Shanghai.
For the most of the day, the yuan had stayed in negative territory, hitting an intra-day low of 7.8477. The central bank set the yuan's mid-point at 7.8487 on Tuesday morning, sharply weaker than Monday's post-revaluation high mid-point of 7.8402.
The yuan mid-point was so high on Monday that some banks and trading companies responded with speculative purchases of dollars. The central bank apparently set a low mid-point on Tuesday to encourage market participants to sell back some of those dollars, traders said.
"The yuan's trading rate proved unable to reach the central bank-set mid-point on Monday, prompting the central bank to adjust its mid-point today," said a trader at a US bank.
In addition, short-term money market rates fell on Tuesday, with the 90-day central bank bill yield in the secondary market indicated at 2.7670 percent bid against 2.7770 percent on Monday, as the central bank fixed a lower yield at its one-year bill sale. One-year offshore NDFs quoted the yuan at 7.5350/7.5400 to the dollar, forecasting a yuan rise of between 4.09 and 4.16 percent from Tuesday's mid-point.
Comments
Comments are closed.