HONG KONG, – China’s yuan weakened slightly against the U.S. dollar on Wednesday, as the central bank eased its fixing and the greenback held on to gains spurred by easing trade tensions and upbeat data.
Prior to the market’s opening, the People’s Bank of China set the midpoint rate at 7.1894 per dollar, 18 pips weaker than the previous level. The midpoint rate is the level around which the yuan is allowed to trade a maximum of 2% up or down.
That comes after the central bank set a slightly weaker-than-expected midpoint fixing for two days in a row, which is seen by market players as a sign to slow the currency’s appreciation.
The yuan is up 1.0% against the dollar this month following a de-escalation in China-U.S. trade tensions, while the greenback weakened on concerns over the U.S. fiscal outlook.
The move indicates that the PBoC is phasing out its one-way CNY fixing support, said Ken Cheung, chief Asian FX strategist at Mizuho Bank.
“Notably, CNH/CNY spot spread has turned negative since May 23, reflecting a modest RMB appreciation bias is building up,” he added.
By 03:22 GMT, the yuan was 0.04% lower at 7.1985 to the dollar after trading in a range of 7.1910 to 7.2033.
The offshore yuan traded at 7.1961 per dollar, down about 0.06% in Asian trade.
Based on Wednesday’s official guidance, the yuan is allowed to drop as far as 7.3332.
Elsewhere, the Hong Kong dollar weakened past 7.84 per dollar for the first time since September 2023.
The dollar’s six-currency index was 0.3% higher at 99.79, building on Tuesday’s rally, as upbeat economic data in the United States and easing trade frictions lifted sentiment.
Key onshore vs offshore levels: * Overnight dollar/yuan swap onshore -6.00 pips vs. offshore -6.00 * Three-month SHIBOR 1.6 % vs. 3-month CNH HIBOR 1.7 %
This article was generated from an automated news agency feed without modifications to text.
