Yuan softens onshore and offshore despite strongest fixing in more than two weeks
US dollar rebounds 0.2 per cent against the Japanese yen before the highly-anticipated Trump-Abe meeting on Friday
The Chinese yuan weakened on Thursday on both domestic and offshore markets, shrugging off the strongest fixing in over two weeks by the People’s Bank of China.
The onshore yuan dropped 0.02 per cent in Shanghai to 6.8653 per US dollar by 4.40pm. In the previous session, it strengthened 0.05 per cent against the greenback by the afternoon close.
In the meantime, the offshore yuan extended losses from the previous two sessions and weakened 0.12 per cent to 6.8502 per US dollar in Hong Kong.
On Thursday, the People’s Bank of China (PBOC) raised the yuan’s reference rate by the most in more than two weeks, setting its mid-point rate at 6.8710 per US dollar, up 139 basis points from the previous fix. On the previous day, the PBOC guided the yuan lower by 245 basis points to 6.8849 per US dollar, the weakest level in three weeks.
In other foreign currency markets on Thursday, the US dollar rebounded against the Japanese yen following the previous day’s decline, up 0.3 per cent to ¥112.27 in the afternoon.
“The focus on USD/JPY saw prices oscillating around the $112.00 level ahead of the highly-anticipated Trump-Abe meeting on Friday,” said Jingyi Pan, a strategist for IG Group.
“With the absence of ‘Trump-inspirations’ lately, the upcoming meeting with Japanese Prime Minister Shinzo Abe could further provide insights into the trade puzzle that remain a mystery, short of the TPP [Trans-Pacific Partnership] withdrawal,” she said.
The greenback erased early gains versus the euro and the sterling in the afternoon, down 0.01 per cent and 0.2 per cent respectively to 1.0699 per euro and 1.2565 per pound.