AGL 40.00 Decreased By ▼ -0.16 (-0.4%)
AIRLINK 129.53 Decreased By ▼ -2.20 (-1.67%)
BOP 6.68 Decreased By ▼ -0.01 (-0.15%)
CNERGY 4.63 Increased By ▲ 0.16 (3.58%)
DCL 8.94 Increased By ▲ 0.12 (1.36%)
DFML 41.69 Increased By ▲ 1.08 (2.66%)
DGKC 83.77 Decreased By ▼ -0.31 (-0.37%)
FCCL 32.77 Increased By ▲ 0.43 (1.33%)
FFBL 75.47 Increased By ▲ 6.86 (10%)
FFL 11.47 Increased By ▲ 0.12 (1.06%)
HUBC 110.55 Decreased By ▼ -1.21 (-1.08%)
HUMNL 14.56 Increased By ▲ 0.25 (1.75%)
KEL 5.39 Increased By ▲ 0.17 (3.26%)
KOSM 8.40 Decreased By ▼ -0.58 (-6.46%)
MLCF 39.79 Increased By ▲ 0.36 (0.91%)
NBP 60.29 No Change ▼ 0.00 (0%)
OGDC 199.66 Increased By ▲ 4.72 (2.42%)
PAEL 26.65 Decreased By ▼ -0.04 (-0.15%)
PIBTL 7.66 Increased By ▲ 0.18 (2.41%)
PPL 157.92 Increased By ▲ 2.15 (1.38%)
PRL 26.73 Increased By ▲ 0.05 (0.19%)
PTC 18.46 Increased By ▲ 0.16 (0.87%)
SEARL 82.44 Decreased By ▼ -0.58 (-0.7%)
TELE 8.31 Increased By ▲ 0.08 (0.97%)
TOMCL 34.51 Decreased By ▼ -0.04 (-0.12%)
TPLP 9.06 Increased By ▲ 0.25 (2.84%)
TREET 17.47 Increased By ▲ 0.77 (4.61%)
TRG 61.32 Decreased By ▼ -1.13 (-1.81%)
UNITY 27.43 Decreased By ▼ -0.01 (-0.04%)
WTL 1.38 Increased By ▲ 0.10 (7.81%)
BR100 10,400 Increased By 213 (2.09%)
BR30 31,653 Increased By 316.8 (1.01%)
KSE100 97,328 Increased By 1781.9 (1.86%)
KSE30 30,192 Increased By 614.4 (2.08%)

SHANGHAI: China’s yuan inched lower against the dollar on Tuesday, as investors waited on a key U.S. inflation report and a string of domestic economic data that could give some steer on the monetary policy outlooks in the world’s two largest economies.

Widening U.S.-China interest rate differentials and policy divergence between the two countries have been one of the crucial factors boosting the U.S. dollar and dragging on the Chinese yuan in recent years.

The Chinese yuan has steadied this week but is within a whisker of a 4-1/2 month low of 7.2364 it struck on April 3, despite the central bank’s firmer daily benchmark settings. The currency is down about 1.9% against the dollar this year.

Prior to the market opening, the People’s Bank of China (PBOC) set the midpoint rate, around which the yuan is allowed to trade in a 2% band, at 7.0956 per dollar, 9 pips weaker than the previous fix of 7.0947. But it was 1,292 pips firmer than a Reuters estimate of 7.2248.

“RMB has been stable, with USD/CNH holding around 7.25 for the last two weeks,” Chang Wei Liang, FX & credit strategist at DBS, said in a note.

Yuan weakens slightly against dollar

“The PBOC has continued to set a string of strong USD/CNY fixings around 7.09,” he said, adding that U.S. Treasury Secretary Janet Yellen’s visit to “China had also been a cordial one, though she raised difficult issues on China’s excess capacity and the threat it poses to producers in the U.S. and other countries.”

In the spot market, the onshore yuan opened at 7.2307 per dollar and was changing hands at 7.2342 at midday, 37 pips weaker than the previous late session close.

“Markets will closely gauge the upcoming economic data,” said a trader at a foreign bank, referring to China’s inflation, trade and credit lending data due later this week.

China is also due to report its first quarter gross domestic product (GDP) data and activity indicators next week.

Some currency traders also pointed out that the losses in the yuan were capped by liquidity tightness in Hong Kong, where offshore yuan overnight HIBOR - a gauge that measures offshore yuan liquidity conditions - jumped to a two-year high of 6.31955% on Tuesday.

Rises in the offshore yuan’s funding costs make it more expensive for some investors to short the yuan.

By midday, the global dollar index rose to 104.168 from the previous close of 104.14, while the offshore yuan was trading at 7.2448 per dollar.

Comments

Comments are closed.