Yuan eases as corporate demand ebbs

SHANGHAI, Jan 17 (Reuters) - China's yuan eased against the
U.S. dollar on Thursday morning as the greenback held steady in
global markets and support from seasonal corporate demand for
the Chinese currency faded.
Prior to market opening, the People's Bank of China (PBOC)
set the midpoint rate at 6.7592 per dollar, 23 pips
firmer than the previous fix of 6.7615.
In the spot market, onshore yuan opened at 6.7496
per dollar and was changing hands at 6.7645 at midday, 65 pips
weaker than the previous late session close and 0.08 percent
softer than the midpoint.
Traders said sentiment was stable, while recent heavy
corporate dollar selling for yuan had eased.
"Corporate client's dollar selling has almost come to an end
as many firms, especially in the manufacturing sector, will shut
down for the upcoming Lunar New Year from next week," said a
trader at a Chinese bank in Shanghai.
The yuan's gains had been supported by seasonal corporate
dollar selling as many companies usually have higher demand for
the renminbi for various payments and financing needs ahead of
the new year holiday and choose to offload their dollars.
On Wednesday, the central bank injected a record $83 billion
into the financial system, seeking to avoid a cash crunch that
would put further pressure on the weakening economy. The
week-long break starts in early February.
A second trader at a Chinese bank in Shanghai said spot yuan
was consolidating after its recent sharp rally and expects the
currency to track the dollar's movement in the near term.
In global markets, the dollar traded marginally higher
against a basket of its peers, taking a breather after gaining
about 1 percent in the past five sessions.
The global dollar index rose to 96.129 at midday from
the previous close of 96.059.
Many market participants see the yuan fluctuating in a range
of 6.7 to 6.8 per dollar for now as the authorities pledge to
keep the currency stable while shifting to an easier stance to
arrest a slowdown in the broader economy.
The PBOC injected a net 380 billion yuan through open market
operations on Thursday following its biggest-ever single day net
liquidity injection a day earlier.
China is expected to release fourth-quarter GDP data on
Monday. Some economists expect growth for the quarter may ease
to its slowest since the 2008/2009 global financial crisis.
As of midday, offshore yuan was trading at 6.7706
per dollar.

The yuan market at 0353 GMT:

ONSHORE SPOT:
Item Current Previous Change
PBOC midpoint 6.7592 6.7615 0.03%

Spot yuan 6.7645 6.758 -0.10%

Divergence from 0.08%
midpoint*
Spot change YTD 1.60%
Spot change since 2005 22.35%
revaluation

Key indexes:

Item Current Previous Change

Thomson 94.48 94.49 0.0
Reuters/HKEX
CNH index
Dollar index 96.129 96.059 0.1

*Divergence of the dollar/yuan exchange rate. Negative number
indicates that spot yuan is trading stronger than the midpoint.
The People's Bank of China (PBOC) allows the exchange rate to
rise or fall 2 percent from official midpoint rate it sets each
morning.

OFFSHORE CNH MARKET

Instrument Current Difference
from onshore
Offshore spot yuan 6.7706 -0.09%
*
Offshore 6.79 -0.45%
non-deliverable
forwards
**

*Premium for offshore spot over onshore
**Figure reflects difference from PBOC's official midpoint,
since non-deliverable forwards are settled against the midpoint.
.


(Reporting by Winni Zhou and John Ruwtich
Editing by Jacqueline Wong)


2019-01-17 07:04:29

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