SHANGHAI: China’s yuan firmed on Friday against the US dollar after the country’s central bank kicked off two funding schemes to help lift the stock market.
China’s central bank started swap and relending schemes that will initially pump 800 billion yuan ($112.38 billion) into the stock market through newly-created monetary policy tools.
The onshore and offshore yuan each strengthened as much as 100 pips on the regulator’s statements, though some of the gains were reversed approaching midday.
China’s stock market sentiment has been a gauge for currency traders over the past month, also reflecting how the market views the recently announced economic stimulus plans.
The equity momentum cooled over the past week, after a frenzied rally since late last month when a series of rate cuts and announcements raised expectations of a major government effort to bolster lacklustre economic growth.
The offshore yuan traded at 7.1292 yuan per dollar, up about 0.11% in Asian trade.
The spot yuan opened at 7.1196 per dollar and was last trading 38 pips firmer than the previous late session close at 7.1197 as of 0324 GMT.
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 7.1274 per dollar.
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