AGL 38.00 Increased By ▲ 0.01 (0.03%)
AIRLINK 210.38 Decreased By ▼ -5.15 (-2.39%)
BOP 9.48 Decreased By ▼ -0.32 (-3.27%)
CNERGY 6.48 Decreased By ▼ -0.31 (-4.57%)
DCL 8.96 Decreased By ▼ -0.21 (-2.29%)
DFML 38.37 Decreased By ▼ -0.59 (-1.51%)
DGKC 96.92 Decreased By ▼ -3.33 (-3.32%)
FCCL 36.40 Decreased By ▼ -0.30 (-0.82%)
FFBL 88.94 No Change ▼ 0.00 (0%)
FFL 14.95 Increased By ▲ 0.46 (3.17%)
HUBC 130.69 Decreased By ▼ -3.44 (-2.56%)
HUMNL 13.29 Decreased By ▼ -0.34 (-2.49%)
KEL 5.50 Decreased By ▼ -0.19 (-3.34%)
KOSM 6.93 Decreased By ▼ -0.39 (-5.33%)
MLCF 44.78 Decreased By ▼ -1.09 (-2.38%)
NBP 59.07 Decreased By ▼ -2.21 (-3.61%)
OGDC 230.13 Decreased By ▼ -2.46 (-1.06%)
PAEL 39.29 Decreased By ▼ -1.44 (-3.54%)
PIBTL 8.31 Decreased By ▼ -0.27 (-3.15%)
PPL 200.35 Decreased By ▼ -2.99 (-1.47%)
PRL 38.88 Decreased By ▼ -1.93 (-4.73%)
PTC 26.88 Decreased By ▼ -1.43 (-5.05%)
SEARL 103.63 Decreased By ▼ -4.88 (-4.5%)
TELE 8.45 Decreased By ▼ -0.29 (-3.32%)
TOMCL 35.25 Decreased By ▼ -0.58 (-1.62%)
TPLP 13.52 Decreased By ▼ -0.32 (-2.31%)
TREET 25.01 Increased By ▲ 0.63 (2.58%)
TRG 64.12 Increased By ▲ 2.97 (4.86%)
UNITY 34.52 Decreased By ▼ -0.32 (-0.92%)
WTL 1.78 Increased By ▲ 0.06 (3.49%)
BR100 12,096 Decreased By -150 (-1.22%)
BR30 37,715 Decreased By -670.4 (-1.75%)
KSE100 112,415 Decreased By -1509.6 (-1.33%)
KSE30 35,508 Decreased By -535.7 (-1.49%)

 SHANGHAI: China's yuan extended its rally against the US dollar on Thursday to its strongest since November 2015, underpinned by a slump in the greenback after the US Treasury secretary said he welcomed a weaker dollar.

The dollar fell to a three-year low against its major trading partners following Treasury Secretary Steven Mnuchin's remarks. Speaking at the World Economic Forum in Davos on the eve of Trump's arrival at the Swiss resort, Mnuchin said the weaker dollar was positive for US trade.

The dollar index, a gauge that measures the unit's strength against six other major currencies, fell to 88.986 as of midday, the lowest since December 2014.

Prior to market opening on Thursday, the People's Bank of China (PBOC) lifted its official yuan midpoint to 6.3724 per dollar, the strongest since November 2015.

Thursday's midpoint was 192 pips, or 0.3 percent, firmer than Wednesday's fix of 6.3916 and was the strongest since Nov. 13, 2015.

In the spot market, the onshore yuan opened at 6.3666 per dollar and rose to a high of 6.3271 at one point in morning trade, the firmest since Nov. 2, 2015.

As of midday, the onshore spot yuan was changing hands at 6.3300 at midday, 290 pips stronger than the previous late session close and 0.67 percent firmer than the midpoint.

If the onshore spot yuan finished the late night session at the midday level, it would have gained 0.46 percent against the greenback on the day.

Its offshore counterpart also followed the strengthening trend on Thursday morning. The offshore yuan surged to a high of 6.3253 per dollar before trading at 6.3325 as of midday.

Traders said the strength in the yuan was mainly driven by continued dollar weakness, which was amplified on Thursday morning following Mnuchin's remarks of welcoming a weaker dollar.

However, the yuan's rapid rise has spurred debate in the market on whether the Chinese unit was getting too strong too quickly.

The Chinese yuan has gained 2.8 percent against the dollar so far this year, following a rise of about 6.8 percent in 2017. Before that, the yuan had suffered three years of depreciating pressure against the dollar.

The Thomson Reuters/HKEX Global CNH index, which tracks the offshore yuan against a basket of currencies on a daily basis, stood at 96.51, firmer than the previous day's 96.2.

Offshore one-year non-deliverable forwards contracts (NDFs), considered the best available proxy for forward-looking market expectations of the yuan's value, traded at 6.4525, 1.24 percent weaker than the midpoint.

One-year NDFs are settled against the midpoint, not the spot rate.

Copyright Reuters, 2018

Comments

Comments are closed.