New | China’s offshore yuan gains most in a week
Traders realise selling of emerging market currencies may be overdone following worse-than-expected US trade deficit
The mainland currency gained the most in the offshore spot market in a week on Wednesday, tracking moves of other major emerging market currencies after trade data from the United States suggested a larger drag on the American economy than most were expecting.
The offshore yuan gained 0.08 per cent to 6.2017 to the US dollar at 4.42pm on Wednesday, the biggest daily gain since Tuesday of last week. In the onshore market, the yuan gained 0.09 per cent to 6.2005.
Traders are selling the US dollar globally on speculation that the US Federal Reserve might not increase interest rates as soon as the third quarter after official data released on Tuesday showed a US$51.4 billion trade deficit for March, the highest in nearly 661/27 years and larger than the US$45.2 billion the US government had expected.
“One thing’s for sure, the deficit was worse than anticipated and it’s going to make first-quarter GDP growth look even worse than it already does,” DBS economists led by David Carbon said in a note released on Wednesday.
The yuan’s stronger performance in the spot market came after the mainland’s central bank set its mid-point rate at 6.1156, 24 basis points stronger than a day earlier.
The US dollar has risen against most major currencies since the middle of last year, as markets weighed expectations of Fed tightening against renewed quantitative easing programmes in Europe and Japan.