Yuan midprice down 87 bp, onshore-offshore gap widens to 200 bp
US Treasury Department says the Chinese currency remains below ‘appropriate medium-term valuation’
The People’s Bank of China set the yuan trading midprice 87 basis points – 0.14 per cent – lower against the US dollar on Tuesday, after the currency met with selling pressure in the offshore market overnight.
Onshore yuan (CNY) was trading at 6.3590 against the greenback on Tuesday morning, a nearly 200 basis points gap with its offshore counterpart (CNH).
CNH recovered at 6.3763, after touching a monthly low of 6.3889 in the early hours of Tuesday, after the US Treasury said in a report that the mainland Chinese currency, also known as renminbi (RMB) “remains below its appropriate medium-term valuation”.
“While the RMB has come under near-term depreciation pressure, short-term market pressures are not always synonymous with the medium-term fundamentals that determine an equilibrium exchange rate,” it said in its semi-annual foreign exchange policy report, released on Monday. “The core factors that have long driven RMB appreciation remain,” .
Those factors included a continuing currency account surplus and relatively strong economic growth expectations, it said.
Both the pound and euro strengthened against the US dollar on Tuesday. The pound rose 0.06 per cent to 1.5470, while the euro climbed 0.09 per cent to 1.1334.
The yen weakened 0.03 per cent to 119.51 against the US dollar.