SHANGHAI: China’s yuan advanced slightly against the US dollar on Friday, after data showed the country’s consumer prices rose at a faster-than-expected rate in July, while the official fixing was also set firmer.
The spot yuan opened at 7.1770 per dollar and was last trading 65 pips firmer than the previous late session close and 0.33% weaker than the midpoint.
China’s consumer price index(CPI) edged up 0.5% from a year earlier in July, versus a 0.2% rise in June, the National Bureau of Statistics (NBS) reported on Friday, beating a 0.3% increase in a Reuters poll of economists.
“Conditions are in place to see inflation trend a little higher in the coming months but it should not impede further monetary easing,” said Lynn Song, chief economist of Greater China at ING.
The yuan is up 0.7% against the dollar this month, in tandem with a surging Japanese yen, as an unwinding of short positions snowballed following a surprise rate hike by the Bank of Japan and weakness in US economic indicators.
However, the Chinese currency is still 0.9% weaker this year. It has been under pressure since early 2023 as domestic woes around a moribund property sector, anaemic consumption and falling yields drive capital flows out of yuan, and foreign investors stay away from its struggling stock market.
Prior to the market opening, the People’s Bank of China set the midpoint rate, around which the yuan is allowed to trade in a 2% band, at 7.1449 per dollar, 241 pips firmer than a Reuters’ estimate.
Friday’s fixing was 11 pips stronger than the previous session despite a broader dollar rebound.
Comments
Comments are closed.