Saturday, November 26

China’s yuan ticks higher but weak fixing, firm dollar cap gains


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SHANGHAI — China’s yuan edged up against

the dollar Friday, continuing a slow march higher as tensions

over the Ukraine crisis support safe-haven bids for the

currency, but moves were kept in check ahead of an annual

parliamentary meeting.

Traders and analysts say that market participants were

cautious ahead of the meeting starting on Saturday, which is

expected to prioritize stimulus and stability in a politically

sensitive year.

Upward pressure on the yuan also eased after a much

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weaker-than-expected midpoint fixing by the central bank. The

People’s Bank of China (PBOC) set the midpoint at

6.3288 per dollar prior to the market open, compared with 6.3143

per dollar predicted by a Reuters model.

Some traders and analysts confirmed that Friday’s guidance

also came in much weaker than their forecasts, a sign that the

Authorities were keen to rein in rapid yuan gains.

The PBOC has repeatedly set its daily benchmark for the yuan

weaker than market forecasts in recent sessions as the yuan rose

to multi-year highs.

“Today’s mid-price may convey the regulator’s attitude. The

market is now very cautious about appreciation, so we’re likely

to see fluctuations in a narrow range,” said a foreign bank

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trader.

Spot yuan opened at 6.3201 per dollar and was

changing hands at 6.3199 at midday, just nine pips firmer than

the previous late session close. The offshore yuan was

trading at 6.3225 per dollar, firming from a close of 6.3232 on

Thursday.

The yuan’s rise came despite gains in the dollar, lifted by

falling US jobless claims data and expectations that higher

US interest rates are all but a certainty at the March 15-16

meeting of the Federal Reserve.

Fed Chair Jerome Powell overnight repeated comments from

Wednesday that he would back an initial quarter percentage point

increase in the Fed’s benchmark rate.

The dollar was boosted further on Thursday by investors

worried by a fire at the largest nuclear power plant in Europe

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during intense fighting between Russian and Ukrainian forces.

Emergency services later said that the fire near the power plant

had been put out.

The dollar index rose to 97.949 on Thursday, up 0.2%

from the previous close.

The yuan market at 4:21AM GMT:

ONSHORE SPOT:

Item Current Previous Change

PBOC midpoint 6.3288 6.3016 -0.43%

Spot yuan 6.3199 6.3208 0.01%

Divergence from -0.14%

midpoint*

Spot change YTD 0.56%

Spot change since 2005 30.96%

revaluation

Key indexes:

Item Current Previous Change

Thomson 105.14 104.7 0.4

Reuters/HKEX

CNH index

Dollar index 97.949 97.785 0.2

*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 6.3225 -0.04%

*

Offshore 6.4476 -1.84%

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 Andrew Galbraith, Winni Zhou and Xiao Han)

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