SHANGHAI/SINGAPORE: China’s yuan eased against the dollar on Monday, as investors anxiously awaited more details of a government stimulus and any developments in Sino-US relations arising from US Secretary of State Antony Blinken’s visit to Beijing.
China’s cabinet met on Friday to discuss measures to bolster a faltering economic recovery and vowed to roll out more policy support.
“There has been little extra detail about the government’s fiscal push to alleviate the downward growth pressures,” analysts at HSBC said in a note.
“The RMB stabilised, as the authorities’ language began to signal a more proactive policy stance, but this could reverse if more details are not forthcoming soon.”
Prior to market opening, the People’s Bank of China (PBOC) set the midpoint rate at 7.1201 per dollar, 88 pips firmer than the previous fix of 7.1289.
In the spot market, the onshore yuan opened at 7.1377 per dollar and eased to 7.1486 by midday, 226 pips weaker than the previous late session close.
Traders said apart from the details and scale of the stimulus package, the Sino-US relations were also in focus as Blinken would wrap up on Monday his two-day trip - the first by a US secretary of state to Beijing in five years.
“Markets will pay close attention to the joint statement after the talks,” said a trader at a foreign bank.
China’s yuan hovers at 6-month low as investors await stimulus measures
Bilateral relations between Beijing and Washington have been one of the key factors affecting sentiment toward the yuan over the past few years.
Separately, China is due to release monthly fixing of lending benchmarks on Tuesday and markets widely expect China to lower the loan prime rate (LPR) after the central bank trimmed key policy rates.
The PBOC lowered short- and medium-term policy rates last week, signaling it is about to embark on another round of loosening in monetary settings in a push to boost economic recovery.
In global markets, investors would be keeping an eye on Federal Reserve Chair Jerome Powell’s testimony later this week to Congress for more clues on the outlook for US monetary policy.
By midday, the global dollar index rose to 102.354 from the previous close of 102.243, while the offshore yuan was trading at 7.152 per dollar.
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