China's yuan weakened against the US dollar on Tuesday after the greenback clawed back from multi-month lows, while borrowing costs in the interbank market remained elevated as liquidity tightened heading into the end of quarter. The People's Bank of China set the midpoint rate at 6.8782 per dollar prior to the market open, weaker than the previous fix of 6.8701.
In the spot market, the yuan opened at 6.8785 per dollar and was changing hands at 6.8836 at midday, 69 pips weaker than the previous late session close and 0.08 percent weaker than the midpoint. The offshore yuan was trading 0.28 percent stronger than the onshore spot at 6.8642 per dollar.
The Thomson Reuters/HKEX Global CNH index, which tracks the offshore yuan against a basket of currencies on a daily basis, stood at 94.01, weaker than the previous day's 94.1. Offshore one-year non-deliverable forwards contracts (NDFs), considered the best available proxy for forward-looking market expectations of the yuan's value, traded at 7.052, 2.46 percent weaker than the midpoint.
One-year NDFs are settled against the midpoint, not the spot rate. In the interbank market, the Shanghai Interbank Offered Rate (SHIBOR) for the seven-day tenor was 2.7910 percent on Tuesday, around its highest level since mid-2015. The dollar remained on shaky ground against its major peers amid concerns over whether US President Donald Trump will be able to pass tax cuts and fiscal spending bills after his failure to rally enough support from his own party for healthcare reforms.
Comments
Comments are closed.