SHANGHAI, Feb 10 (Reuters) - China's yuan eased from a
10-day high in thin trade on Wednesday as investors unwound long
positions in the local currency to avoid fluctuations heading
during the Lunar New Year break.
Traders said corporate clients had already converted most of
their dollar receipts into yuan while most market participants
had squared their books and refrained from holding large yuan
amounts during the long holiday period.
Chinese financial markets close on Thursday with trade
resuming on Feb. 18.
Prior to the market opening, the People's Bank of China
(PBOC) set the midpoint rate at a near 32-month high
of 6.4391 per dollar, 142 pips, or 0.22% firmer than the
previous fix of 6.4533.
In the spot market, the onshore yuan opened at
6.4400 per dollar and was changing hands at 6.4377 at midday,
weaker than the 10-day high of 6.4333 hit a day earlier.
Several traders said they continued to see state-run banks
purchasing small amounts of dollars in onshore spot market to
rein in the strength in the local currency.
Similarly, those big banks were seen buying greenbacks to
offset seasonal corporate dollar selling at 6.46 per dollar last
week. Traders and analysts interpreted those moves as a sign
that the authorities were unwilling to see too rapid gains in
the yuan.
Separately, the market had little reaction to economic data
that showed consumer prices unexpectedly slipping into deflation
last month and bank loans surging to a record
high.
"With vaccines gaining traction, we expect the PBOC to start
to pare back its credit-fueled stimulus efforts," Win Thin,
global head of currency strategy at Brown Brothers Harriman,
said in a note.
"The bank should also continue its policy of allowing the
yuan to appreciate and gently curbing credit to system,
especially when directed towards real-estate and financial
assets."
By midday, the global dollar index fell to 90.397,
while the offshore yuan was trading at 6.4243 per
dollar.
The yuan market at 0401 GMT:
ONSHORE SPOT:
Item Current Previous Change
PBOC midpoint 6.4391 6.4533 0.22%
Spot yuan 6.4377 6.4342 -0.05%
Divergence from -0.02%
midpoint*
Spot change YTD 1.41%
Spot change since 2005 28.56%
revaluation
Key indexes:
Item Current Previous Change
Thomson 96.77 96.73 0.0
Reuters/HKEX
CNH index
Dollar index 90.397 90.461 -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 6.4243 0.21%
*
Offshore 6.5927 -2.33%
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 Winni Zhou and Andrew Galbraith; Editing by Sam
Holmes)
.Source
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