PBOC sets yuan fix up as currency trades at strongest in a week

Onshore and offshore yuan continues to diverge by 200 bp

PUBLISHED : Wednesday, 21 October, 2015, 8:46am
UPDATED : Wednesday, 21 October, 2015, 10:20am

The People’s Bank of China set the midpoint of the yuan 141 basis points or 0.22 per cent stronger on Wednesday against the US dollar as the currency trades at its highest level in a week in both the onshore and offshore markets.

The onshore yuan (CNY) touched 6.3438 to the dollar and the offshore yuan (CNH) was trading at 6.3627 against the greenback, both at weekly highs.

The spread between CNY and CNH continues to run above 200 basis points, reversing a converging trend seen in the past two weeks.

Beijing’s push for capital account reforms against a backdrop of a slowing economy and a loosening in monetary policy could exert greater depreciation pressure on the renminbi, HSBC said.

“Modest depreciation is also likely to materialise with greater two-way volatility as the RMB moves

toward a floating exchange rate regime,” the lender said in a note.

It forecasts the CNY to trade 6.50 by year end and 6.60 in 2016 against the US dollar.

Dollar/Pound gained 0.01 per cent to 1.5441; Dollar/Euro climbed 0.15 per cent to 1.1360. Yen weakened 0.05 per cent to 119.88 against the dollar.

 
 
 

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