Chinese yuan inches higher, market eyes PMI in December to gauge impact of COVID

SHANGHAI, December 26 (Reuters)China’s yuan strengthened against the dollar in holiday trading on Monday as investors awaited data to be released later this week to gauge the economic impact of Beijing’s decision to lift its strict COVID-19 protocols earlier this month.

In the spot market, the mainland yuan CNI=CFKSS opened at 6.9900 per dollar and traded hands at 6.9789 at midday, 129 pips tighter than its previous late session close.

Prior to market opening, the People’s Bank of China (PBOC) set the mid-rate CNI=PBOC at 6.9825 to the dollar, 15 pips weaker than the previous fix of 6.9810.

“The yuan is likely to finish the year at current levels and on the firmer side of the key 7 for the dollar,” said a trader at a Chinese bank, noting that the market lacked clear guidance with low trading levels.

Trading volume CNISPTVOL=CFXT as of midday it was down to $2.6 billion, significantly less than the normal mid-day volume of about $15 billion.

Meanwhile, the number of COVID cases is now rising across the country, with the country’s two largest cities – Shanghai and Beijing – approaching life with COVID.

Zhejiang, a large industrial province near Shanghai, is grappling with about a million new infections a day, and the number is expected to double in the coming days, the provincial government said. Sunday.

Vin Thin, global head of currency strategy at Brown Brothers Harriman, warned that the economy could “stop this month”.

“How long the slowdown lasts will depend on how the virus spreads, but early indications are not good,” he said in a note late last week.

Currency traders also said they would pay close attention to December’s factory activity data due on Saturday to gauge the extent of the disruption to economic activity from the spike in COVID infections.

“Recent market concerns lie with how the broader economy will recover after the pandemic subsides, and high-frequency economic data could be an important reference,” CICC analysts said in a note.

By noon, the global dollar index .DXI was 104,325, while the offshore yuan CNH=D3 it was trading at 6.99 to the dollar.

Yuan market at 03:51 GMT:




The previous one


PBOC midpoint CNI=SAEC




Spot yuan CNI=CFKSS




Divergence from the mean*


Spot change since the beginning of the year


Spot change since the 2005 revaluation


Key indexes:



The previous one


Thomson Reuters/HKEKS CNH index


Dollar index




*Divergence of the dollar/yuan exchange rate. A negative number indicates that the spot yuan is trading stronger than the midpoint. The People’s Bank of China (PBOC) allows the exchange rate to rise or fall by 2% from the official mid-rate it sets each morning.




The difference from the mainland

Offshore spot yuan CNH= *



Offshore undeliverable terms CNI1INDFOR= **



*Premium for offshore spot compared to onshore CNI=CFKSS

**The figure reflects the difference from the PBOC’s official midpoint, as undeliverable forwards are calculated relative to the mean. CNI=SAEC.

(Reporting by Winnie Jo and Brenda Go; Editing by Kenneth Maxwell)

((; +86 21 2083 0100; Reuters messages:

The views and opinions expressed herein are those of the authors and do not necessarily reflect the views of Nasdaq, Inc.

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