30 Aug, 2010, 03.23PM IST,REUTERS
Yuan ends down vs dollar, c.bank halts yuan rise
SHANGHAI: The yuan closed lower against the dollar on Monday as the People's Bank of China set another weak mid-point, signalling it has halted for now the yuan's appreciation in the wake of the Chinese currency's initial rise after its depegging in mid-June. Weak data from the United States and Japan appears to have pushed China toward a policy of keeping the yuan stable at around 6.80 against the dollar, dealers said, as it resists external political pressures to let the Chinese currency rise faster.
The European Union feels China has made only limited progress in allowing the yuan to move more rapidly and that China's swifter action would help safeguard a fragile economic recovery, according to a draft G20 document obtained by Reuters on Saturday. The document outlines EU positions ahead of a Group of 20 deputy finance leaders meeting in Gwangju, South Korea, from Sept. 4-5. South Korea will host a G20 leaders summit in November.
"China always believes a stable yuan is the best choice for both China and the world amid global economic turmoil," said a dealer at a Chinese commercial bank in Shanghai. "As uncertainties are on the rise for major global economies in recent weeks, it appears China has decided to back away from a mid-June intention of letting the yuan appreciate slowly but steadily versus the dollar, preferring now an even stabler yuan."
The PBOC fixed the mid-point, or its daily reference rate against the dollar, at 6.8025 on Monday, weaker than Friday's 6.8001, guiding spot yuan to finish at 6.8030 from Friday's close of 6.7982. Reversing an earlier trend to allow the yuan to appreciate slightly, the Chinese central bank has guided the yuan lower since Aug. 9 when the yuan hit a high of 6.7644 to the dollar -- its strongest since the landmark July 2005 yuan revaluation. Several dealers said the yuan was likely to move mainly around 6.80 in coming weeks, with the near-term ceiling seen at the post-revaluation high and floor at 6.8262 -- its level before the PBOC depegged the yuan from the dollar on June 19.
Offshore, benchmark one-year dollar/yuan non-deliverable forwards (NDFs) were bid at 6.6980 late on Monday from 6.6860 at Friday's close, with their implied 12-month yuan appreciation falling to 1.56 percent from 1.71 percent. As the yuan appears increasingly unlikely to appreciate sharply any time soon, some activity in NDFs is now diverted into Hong Kong's yuan deliverable forwards after China in recent months opened alternatives for the use of yuan outside its borders, traders said.
Yuan ends down vs dollar, c.bank halts yuan rise
SHANGHAI: The yuan closed lower against the dollar on Monday as the People's Bank of China set another weak mid-point, signalling it has halted for now the yuan's appreciation in the wake of the Chinese currency's initial rise after its depegging in mid-June. Weak data from the United States and Japan appears to have pushed China toward a policy of keeping the yuan stable at around 6.80 against the dollar, dealers said, as it resists external political pressures to let the Chinese currency rise faster.
The European Union feels China has made only limited progress in allowing the yuan to move more rapidly and that China's swifter action would help safeguard a fragile economic recovery, according to a draft G20 document obtained by Reuters on Saturday. The document outlines EU positions ahead of a Group of 20 deputy finance leaders meeting in Gwangju, South Korea, from Sept. 4-5. South Korea will host a G20 leaders summit in November.
"China always believes a stable yuan is the best choice for both China and the world amid global economic turmoil," said a dealer at a Chinese commercial bank in Shanghai. "As uncertainties are on the rise for major global economies in recent weeks, it appears China has decided to back away from a mid-June intention of letting the yuan appreciate slowly but steadily versus the dollar, preferring now an even stabler yuan."
The PBOC fixed the mid-point, or its daily reference rate against the dollar, at 6.8025 on Monday, weaker than Friday's 6.8001, guiding spot yuan to finish at 6.8030 from Friday's close of 6.7982. Reversing an earlier trend to allow the yuan to appreciate slightly, the Chinese central bank has guided the yuan lower since Aug. 9 when the yuan hit a high of 6.7644 to the dollar -- its strongest since the landmark July 2005 yuan revaluation. Several dealers said the yuan was likely to move mainly around 6.80 in coming weeks, with the near-term ceiling seen at the post-revaluation high and floor at 6.8262 -- its level before the PBOC depegged the yuan from the dollar on June 19.
Offshore, benchmark one-year dollar/yuan non-deliverable forwards (NDFs) were bid at 6.6980 late on Monday from 6.6860 at Friday's close, with their implied 12-month yuan appreciation falling to 1.56 percent from 1.71 percent. As the yuan appears increasingly unlikely to appreciate sharply any time soon, some activity in NDFs is now diverted into Hong Kong's yuan deliverable forwards after China in recent months opened alternatives for the use of yuan outside its borders, traders said.