Yuan strengthens as dollar in broad retreat
The Chinese yuan strengthened slightly against the US dollar Thursday, as the greenback suffered broad losses versus a basket of major currency peers.
In the spot market in Shanghai, the US dollar bought 6.8854 yuan as of 3pm, down 0.04 per cent from 6.888 yuan late Wednesday.
In Hong Kong’s offshore market, the dollar was lower at 6.8812, compared with 6.8854 in the prior session.
Earlier, the PBOC cut the yuan’s mid-point rate to 6.8664, weaker by 128 basis points from the previous day.
The ICE US Dollar Index, a measure of the greenback’s strength against a basket of other currencies, dipped 0.04 per cent to 99.799 in afternoon trade.
Analysts said market conditions are relatively quiet as investors turned risk-off amid a number of uncertainties, including geopolitical risks, the UK snap election, and the first round of French elections this weekend.
“We’re seeing a greater propensity for position unwind this week due to the high level of investor anxiety over the French election narrative,” said Stephen Innes, a senior trader at Oanda Asia Pacific.
“With so many uncertainties offering few incentives for investors to re-engage risk exposure, clearly there is little market bravado, as dealers appear to be disposed to participate after the fact, rather than play the post-election knee-jerk,” he said.
Against the Japanese yen, the US dollar was off 0.1 per cent to ¥108.75.
The greenback also slipped versus both the euro and sterling.
The euro traded at US$1.0741, up 0.28 per cent from 1.0711 in the previous day.
The pound was up 0.47 per cent to US$1.2837, compared with 1.2777 late Wednesday. On Tuesday, sterling soared more than 2 per cent to US$1.2904, the highest level since October, after the UK Prime Minister Theresa May called a snap general election in June in a surprise announcement.