SHANGHAI/BEIJING, Dec 31 (Reuters) - The yuan briefly jumped
to a more than 30-month high on Thursday before giving back all
the gains at midday, as state banks bought dollars to prevent
the local unit from rising too fast.
Traders told Reuters that China's major state-owned banks
were seen buying U.S. dollars at a rate of about 6.52 yuan on
Thursday, in a move viewed as an effort to keep the local
currency from rising too fast and breaching a key level.
The onshore yuan opened at 6.5204 per dollar and
surged to a high of 6.5148 at one point in morning trade, its
loftiest since June 22, 2018.
Following the state bank actions, the spot market changed
hands at 6.5305 by midday, 59 pips weaker than the previous late
session close.
Traders said strength in the yuan in early trade mostly
reflected the dollar's movements in global market as investors
wager a global economic recovery will suck money into riskier
assets even as the yawning U.S. twin deficits argue for an ever
cheaper currency.
A trader at a foreign bank said the major state-run banks'
actions in the spot market were not meant to reverse the yuan's
appreciation trend but rather slow the rapid rallies.
"But given the current dollar trend, USD/CNY is likely to
fall after the New Year holiday," the trader said.
For 2020, the yuan is up nearly 7% and was set to book its
first annual gain in three, thanks to the weaker dollar, the
widening yield gap between China and the United States and
China's effective coronavirus containment.
Earlier gains in the yuan were also supported by solid
economic data. China's factory activity expanded in December as
hot export demand fueled a recovery in the world's
second-largest economy.
Prior to market opening, the People's Bank of China (PBOC)
set the midpoint rate at 6.5249 per dollar, firmer
than the previous fix of 6.5325.
The global dollar index traded at 89.658 at midday,
when the offshore yuan was trading at 6.5063 per
dollar.
The yuan market at 0438 GMT:
ONSHORE SPOT:
Item Current Previous Change
PBOC midpoint 6.5249 6.5325 0.12%
Spot yuan 6.5305 6.5246 -0.09%
Divergence from 0.09%
midpoint*
Spot change YTD 6.63%
Spot change since 2005 26.74%
revaluation
Key indexes:
Item Current Previous Change
Thomson 95.03 94.96 0.1
Reuters/HKEX
CNH index
Dollar index 89.658 89.595 0.1
*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% from official midpoint rate it sets each
morning.
OFFSHORE CNH MARKET
Instrument Current Difference
from onshore
Offshore spot yuan 6.5063 0.37%
*
Offshore 6.6668 -2.13%
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.
.
(Reporting by Shanghai and Beijing Newsroom; Editing by Sam
Holmes)
.Source
Related