HONG KONG: China’s yuan was steady against the U.S. dollar on Monday, as better-than-expected data and fresh stimulus measures supported sentiment.
China’s industrial output in the first two months of the year grew 5.9%, beating estimates, while retail sales grew 4% in line with forecasts.
That followed the State Council’s “special action plan” to boost domestic consumption and residents’ income released on Sunday, to fend off deflationary pressure and reduce the world’s second-largest economy’s reliance on exports and investment for growth.
“China unveiled more measures to support consumption, mainly through raising income; this may help lift overall risk sentiment in the domestic market,” Frances Cheung, head of Asia interest rates and currency strategy at OCBC in Singapore, said in a client note.
Investors are now awaiting further details on steps to boost domestic consumption from top officials at a press conference scheduled for 0700 GMT on Monday.
By 0233 GMT, the yuan was little changed at 7.2358 to the dollar, hovering near a four-month high.
Yuan steady as markets weigh trade war escalation
The yuan is up 0.7% against the dollar this month and 0.9% firmer this year, as a rally in the greenback lost steam on concern over tariff uncertainty harming the U.S. economy.
The six-currency U.S. dollar index was 0.039% lower at 103.69.
Prior to the market opening, the People’s Bank of China set the yuan midpoint rate at 7.1688 per dollar, its strongest since November.
The central bank has kept the midpoint rate steady amid the prospect of U.S. tariffs, indicating the authorities are reluctant to see the currency depreciating quickly, analysts said.
The offshore yuan traded at 7.2373 yuan per dollar, up about 0.03% in Asian trade.
Government 10-year bond yields rose 2.8 basis points to 1.93%. The yield on similar U.S. government benchmark debt was 4.3%. The yuan onshore 7-day benchmark repo rate was at 1.9%.
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