China’s yuan bounces from 14-year low after PBOC verbal warning

China’s yuan bounces from 14-year low after PBOC verbal warning By Reuters

Breaking News

‘;

Economy 12 minutes ago (Sep 29, 2022 01:30AM ET)

(C) Reuters. FILE PHOTO: A China yuan note is seen in this illustration photo May 31, 2017. REUTERS/Thomas White/Illustration/

SHANGHAI (Reuters) – China’s yuan bounced on Thursday from a 14-year low against the dollar hit in the previous session, snapping eight straight days of losses, after the central bank warned against speculative trading and heavy one-way bets on the currency.

The People’s Bank of China (PBOC) said on Wednesday that stabilising the foreign exchange market is the top priority, and reiterated that the yuan has a solid basis to be basically stable.

The statement “illustrated PBOC’s further concerns on the rapid depreciation of the currency … (though) the PBOC would not defend a particular level of the exchange rate especially given the depreciation was driven by continued appreciation of the broad USD,” analysts at Goldman Sachs (NYSE:GS) said in a note.

Prior to the market opening, the PBOC set the midpoint rate at 7.1102 per dollar, 5 pips firmer than the previous fix of 7.1107.

In the spot market, the onshore yuan opened at 7.1500 per dollar and was changing hands at 7.1903 at midday, 117 pips or 0.16% firmer than the previous late session close.

The yuan hit a low of 7.2521 per dollar on Wednesday, the weakest level since the global financial crisis of 2008.

Its offshore yuan also rebounded from its lowest level on record hit a day earlier to trade at 7.192 per dollar by midday.

Currency traders said a retreat in dollar index, along with the PBOC’s verbal warnings, helped lift the yuan in morning deals.

The rare strong tone of the verbal warning discouraged many investors from testing new lows in the yuan, said a trader at a foreign bank.

Separately, the state-owned Securities Times said in a front-page commentary on Thursday that the yuan is unlikely to continue depreciating rapidly.

Market participants usually view such official remarks and state media commentaries as a sign that authorities are growing uncomfortable with rapid currency movements.

But some analysts said as long as the Federal Reserve continues to raise interest rates aggressively to tame high inflation, the yuan could still face pressure.

“We expect upward pressure on USD/CNY to persist amid aggressive Fed hikes,” analysts

“Even though the PBOC will continue to pace the rise in USD/CNY, we expect upward pressure to take the pair to 7.20 by early 2023.”

The yuan market at 0402 GMT:

ONSHORE SPOT:

Item Current Previous Change

PBOC midpoint 7.1102 7.1107 0.01%

Spot yuan 7.1903 7.202 0.16%

Divergence from 1.13%

midpoint*

Spot change YTD -11.62%

Spot change since 2005 15.11%

revaluation

Key indexes:

Item Current Previous Change

Thomson 0.0

Reuters/HKEX

CNH index

Dollar index 113.262 112.604 0.6

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

OFFSHORE CNH MARKET

Instrument Current Difference

from onshore

Offshore spot yuan * 7.192 -0.02%

Offshore 7.0845 0.36%

non-deliverable

forwards **

*Premium for offshore spot over onshore

**Figure reflects difference from PBOC’s official midpoint, since non-deliverable forwards are settled against the midpoint..

China’s yuan bounces from 14-year low after PBOC verbal warning

Challenging ‘orthodoxy,’ Kwarteng clings on after UK market routBy Reuters – Sep 29, 2022

By Sinead Cruise, Alistair Smout and Elizabeth Piper LONDON (Reuters) – As new British finance minister, Kwasi Kwarteng hoped to take down finance ministry groupthink that he and…

Indonesia central bank sees pressure on rupiah as temporary-officialBy Reuters – Sep 29, 2022

By Gayatri Suroyo and Stefanno Sulaiman JAKARTA (Reuters) – Pressure on Indonesia’s rupiah is expected to be temporary, a senior Bank Indonesia (BI) official said on Thursday,…

Analysis-Goodbye, TINA: higher yields muddy outlook for struggling U.S. stocksBy Reuters – Sep 29, 2022

By Lewis Krauskopf NEW YORK (Reuters) – Soaring interest rates are providing investors with attractive alternatives to stocks, complicating the picture for equities in an…

Our Apps



Terms And Conditions
Privacy Policy
Risk Warning

(C) 2007-2022 Fusion Media Limited. All Rights Reserved.

Risk Disclosure: Trading in financial instruments and/or cryptocurrencies involves high risks including the risk of losing some, or all, of your investment amount, and may not be suitable for all investors. Prices of cryptocurrencies are extremely volatile and may be affected by external factors such as financial, regulatory or political events. Trading on margin increases the financial risks.Before deciding to trade in financial instrument or cryptocurrencies you should be fully informed of the risks and costs associated with trading the financial markets, carefully consider your investment objectives, level of experience, and risk appetite, and seek professional advice where needed.Fusion Media would like to remind you that the data contained in this website is not necessarily real-time nor accurate. The data and prices on the website are not necessarily provided by any market or exchange, but may be provided by market makers, and so prices may not be accurate and may differ from the actual price at any given market, meaning prices are indicative and not appropriate for trading purposes. Fusion Media and any provider of the data contained in this website will not accept liability for any loss or damage as a result of your trading, or your reliance on the information contained within this website.It is prohibited to use, store, reproduce, display, modify, transmit or distribute the data contained in this website without the explicit prior written permission of Fusion Media and/or the data provider. All intellectual property rights are reserved by the providers and/or the exchange providing the data contained in this website.Fusion Media may be compensated by the advertisers that appear on the website, based on your interaction with the advertisements or advertisers.

About the author

Related