Market watchers warn of yuan depreciation
Onshore yuan trading at 6.6888 to the greenback, ahead 0.05pc, while offshore yuan in Hong Kong trading at 6.6769, 10 points stronger than Tuesday
China’s yuan traded slightly stronger on Wednesday morning, despite concerns of a US rates hike, but market watchers warned depreciation risks still exist.
Onshore yuan in Shanghai traded at 6.6888 to the US dollar by 10.15 am, 0.05 per cent or 32 points stronger than on Tuesday. Offshore yuan in Hong Kong traded at 6.6769 to the US dollar, 0.01 per cent, or 10 points stronger than on Tuesday.
The People’s Bank of China on Wednesday set the yuan reference point against the greenback at 6.6908, 98 basis points or 0.15 per cent weaker than on Tuesday. Traders are allowed to trade up to 2 per cent either side of the reference point for the day.
Stephen Innes, senior trader at Oanda, said he expected the US dollar to remain strong after upbeat data lifted the possibility that a US rate rise is moving closer.
“US rate-hike fever continues dominating the foreign exchange landscape,” said Innes.
“The US dollar is trading favourably despite the next major catalyst, Friday’s jobs report.
“With the US rate hike probabilities on the rise, I expect the Chinese yuan to be one of the significant casualties.”
US consumer confidence rose to an 11-month high in August to 101.1, with households more upbeat about the labour market, in a further sign that the economy was regaining steam . Investors are now keeping a close eye on Friday’s non-farm payroll report.
In other currency trading, the pound broke its four-day winning streak, falling 0.15 per cent to trade at US$ 1.3101. The euro ended its three-day rise, to trade at 0.1 per cent lower to US$1.1152.