Offshore investors’ outlook for the renminbi strengthened to the strongest level in a week, despite a weaker benchmark rate set by China’s central bank for the second day running amid talk of additional stimulus measures to be enacted by Beijing.
The People’s Bank of China weakened the benchmark midpoint rate for renminbi against the US dollar by 15 basis points to 6.1180, the second day it has done so to weaken the currency. Onshore traders are allowed to trade the currency in the spot market two per cent above or below the midpoint rate.
The 12-month non-deliverable forwards, which reflect offshore investors’ outlook for the currency a year from now, strengthened 0.11 per cent, or 68 basis points, to 6.3621 as of 12:09 pm, the strongest level since last Tuesday.
“The IMF is ready to call China’s yuan fairly valued, if recent leaks or press reports prove to be true,” said DBS economists led by David Carbon.
The Wall Street Journal report on Monday said that IMF is on the verge of declaring China’s yuan as fairly valued for the first time in more than a decade, after criticising Beijing for its management of the currency for years.
In the spot market, the onshore yuan was relatively stable after suffering from the biggest daily losses in nearly 31 months on Monday. The note strengthened 0.03 per cent, or 19 basis points, to 6.2060 at noon.