Yuan trends higher on second day of G20 summit
The Chinese yuan strengthened slightly against the US dollar on Monday, as traders took stock of recent data that suggested a more dovish pace of US interest rate hikes this autumn than was previously expected.
Onshore yuan in Shanghai was quoted at 6.6788 per US dollar by 11.30am on Monday, compared to 6.6800 at the close in the previous trading session. Offshore yuan traded in Hong Kong was also slightly higher at 6.6900, compared to its previous close of 6.6980.
The People’s Bank of China on Monday cut the yuan reference rate against the US dollar by 146 basis points or about 0.2 per cent to 6.6873, compared to its fix of 6.6727 last Friday. Traders are allowed to trade up to 2 per cent either side of the reference point for the day.
“The yuan is basically at its equilibrium level at the moment and I don’t see significant weakening by the end of this year,” said Hong Hao, managing director and the chief strategist at Bocom International in Hong Kong.
On Friday, August employment data showed the American economy added 151,000 non-farm jobs, short of an expected 180,000 positions for the month.
Other currency analysts were more sceptical about the outlook for the yuan.
The yuan is expected to face bigger fluctuations and more depreciation pressure after the Group of 20 summit meeting closes, said Ming Ming, chief fixed-income strategist at the CITIC Securities, in a research note. One theory being circulated is that the Chinese government is supporting the currency during the two-day G20 summit in China’s eastern city of Hangzhou, which concludes later today.
The PBOC set the mid-price of the yuan against the euro at 7.4595, stronger by 116 basis points, at 6.4345 against 100 yen, stronger by 299 basis points, and at 8.8905 to the pound, weaker by 332 basis points.