Yuan seesaws against dollar amid Trump protectionism worries

Analysts expect yuan to remain in a tight range as China’s important Lunar New Year holidays near

PUBLISHED : Tuesday, 24 January, 2017, 10:46am
UPDATED : Tuesday, 24 January, 2017, 10:46am

The Chinese yuan seesawed Tuesday morning between small gains and losses against the US dollar, following a decline in the greenback against other currencies as investors worried about US president Donald Trump’s protectionist policies.

The onshore yuan, which trades in Shanghai, moved up 0.02 per cent or 13 basis points at 6.8524 as of 10.30am.

The offshore yuan also swung between gains and losses after market open. It fell 0.04 per cent or 24 basis points to 6.8155 in Hong Kong at 10.30am.

The People’s Bank of China (PBOC) on Tuesday raised the yuan’s mid-point rate to 6.8331 per dollar, up 241 basis points from the previous reference rate.

The yuan advanced Monday against the greenback following a stronger fix by the PBOC.

On Monday night, the dollar weakened broadly against a basket of major currencies as the US withdrawal from the Trans-Pacific Partnership reinforced investor fears about Trump’s protectionist stance on policies.

“Aggravating the dollar decline overnight had been comments from US Treasury Secretary nominee Steven Mnuchin that echoed the newly-minted President’s sentiment on a strong US currency hurting the US economy,” said Jingyi Pan, a strategist for IG Group.

“As China’s most significant holidays near, the [renminbi] will likely remain in tight ranges,” said Stephen Innes, a senior trader at Oanda Asia Pacific.

He also expected dollar traders to hold a cautious view in the short term.

“Given the enormous uncertainties with any current bias, dealers will continue to run day positions but will have little appetite to build or maintain a longer term view,” he said. “Look for the current USD whipsaw to remain the name of the game.”