Chinese yuan strengthens ahead of Brexit vote
Chinese yuan strengthened against the dollar on Monday after the central bank set the currency stronger against the greenback.
Onshore yuan in Shanghai traded at 6.5780 to the US dollar at 10.15 am, 0.1 per cent or 68 points higher than on Friday.
Offshore yuan in Hong Kong traded at 6.5845 to the US dollar at 10.15 am, 0.17 per cent, or 113 points higher than Monday.
The People’s Bank of China on Monday set the yuan reference point against the US dollar at 6.5708, 87 basis points or 0.13 per cent stronger than on Friday. Dealers are allowed to trade up to 2 per cent either side of the reference point for the day.
Stephen Innes, senior trader at Oanda Asia Pacific, said “position trimming” in Chinese offshore yuan will “dominate pre-Brexit flow”.
London could lose its sheen as an offshore yuan centre if Britain votes to exit the European Union later this week, with a sizable chunk of the existing Chinese currency deals moving to other European cities and Hong Kong, analysts said.
London’s gateway position in Europe makes it an ideal city for offshore trading of the Chinese currency. Yuan bonds issued in London are easily tradable within Europe, but if Britain decides to exit the EU, then these bonds would face European banking, fund transfer and talent recruitment restrictions.