The yuan eased against the dollar on Friday despite China reporting its first rise in foreign exchange reserves since November, with traders saying the market had already priced the move in. The spot yuan opened at 6.4771 per dollar and was changing hands at 6.4772 at midday, weakening 0.07 percent from the previous late session close.
The People's Bank of China set the midpoint rate at 6.4733 per dollar prior to market open, 0.04 percent weaker than the previous fix 6.4707. "It's not really a surprise," said a trader at a Chinese commercial bank in Shanghai. "Limited central bank intervention in March, a defensive dollar, and profit-taking in the swaps market all contributed to the increase in FX reserves."
Central bank data showed on Thursday that China's foreign exchange reserves - the world's largest - surprisingly rose $10.26 billion in March to $3.21 trillion, the first monthly gain since November, as cooling expectations of US interest rate hikes eased pressure on the yuan. The central bank also said on Thursday its move to use the International Monetary Fund's Special Drawing Rights (SDR) to measure its foreign exchange reserves would help limit valuation changes caused by currency volatility. HSBC Holdings expects China to continue to allow the yuan to weaken against the US dollar, Chief Executive Stuart Gulliver said on Thursday.
Comments
Comments are closed.