Yuan see-sawed against US dollar on Monday after hitting a three-month high on Friday.
The US dollar weakened against most other currencies as traders now believe there is almost no chance of an interest rate increase by the US Fed at its meeting this Wednesday. But the yuan has not been rallying either as it lacks strong fundamentals, analysts said.
Offshore yuan traded in Hong Kong and overseas markets rose to 6.4805 to the dollar in the morning, up 0.03 per cent from Friday, when it hit a three-month high. It then softened 0.15 per cent to 6.4919 at 5pm.
Onshore yuan traded in a similar pattern, first increasing 0.06 per cent to 6.4899, before edging down to 6.4924 at 5pm, the same as Friday’s close when it hit a two-month high.
The People’s Bank of China (PBOC) set the mid-price at 6.4913, weaker by 8 basis point from Friday, when it set the reference price at the strongest level this year. The currency is allowed to be traded 2 per cent up or down the mid-price set by the PBOC.
Jasper Lo Cho-yan, chief executive of King International Financial, said the yuan would continue to fluctuate against the US dollar for some time.
“The yuan’s rise to a three-month high last week was due to the weak US dollar as the market widely believed the US would not increase the interest rate at the Fed meeting this Wednesday,” Lo said.