The yuan closed firmer against the dollar on Thursday after China's central bank set a stronger reference rate and local shares stormed higher. Before trade began, the central bank fixed the yuan's daily mid-point, or reference rate, at 6.8318 versus the dollar, slightly higher than Wednesday's 6.8329, partly due to a globally weaker dollar.
Spot yuan closed at 6.8318 on Thursday, up from Wednesday's close of 6.8341. "The dollar's fall globally makes the central bank set the mid-point higher," said a dealer at an Asian bank in Shanghai. "But the stable yuan policy and unstable economic conditions will not allow the yuan to move too much."
Market sentiment was also underpinned by a rebounding share market, with the Shanghai Composite Index bouncing up 4.5 percent on Thursday, posting their second-biggest daily percentage gain of the year. Signs of official support for the market triggered technical buying, helping battered shares claw back some of the 20-percent of losses in the two week's to Wednesday's close.
Meanwhile, the overseas edition of the People's Daily, an official newspaper, said on Thursday that China had no choice but to increase its holdings of US government debt for now, adding that diversifying the nation's foreign exchange holdings would be a painstaking shift.
China owned $776.4 billion of US government debt in June, down 3.1 percent from $801.5 billion in May, according to official US Treasury figures. The percentage fall was the largest in nearly nine years, but China's holdings were still up from $763.5 billion in April and $767.9 billion in March. Offshore, benchmark one-year dollar-yuan non-deliverable forwards (NDFs) fell to 6.8020 bid late on Thursday from Wednesday's close of 6.8150.
Comments
Comments are closed.