Yuan flat vs dol­lar, cbank sets weaker mid-point

The Pak Banker - - Front Page -

SHANG­HAI: China's yuan was mostly flat against the dol­lar on Wed­nes­day af­ter the Peo­ples' Bank of China set a weaker mid-point to re­flect a strong dol­lar in­dex.

Deal­ers said banks and their clients built long po­si­tions in dol­lars to bet on a con­tin­ued near-term rise in the dol­lar in global mar­kets, but in­vestors re­mained cau­tious af­ter the cen­tral bank set only a slightly weaker mid-point.

The 24-pip fall in the PBOC's mid-point, widely lagged a 0.5 per­cent jump in the dol­lar in­dex overnight, which re­flects the cen­tral bank's wish to keep the yuan in a tight range. Spot yuan was trad­ing at 6.6650 ver­sus the dol­lar by mid­day, lit­tle changed from Tues­day's close of 6.6670 but was still up 2.43 per­cent since the PBOC an­nounced a de­peg­ging in mid-June.

It moved in a small range of 6.6647 to 6.6774, trad­ing firmer than the cen­tral bank's daily mid-point of 6.6786, the weak­est level since Nov. 3, and down from Tues­day's 6.6762.

"We are fo­cused on the dol­lar in­dex per­for­mance for now," said a dealer at an Euro­pean bank in Shang­hai. "And the sta­ble fix­ing gives us a sig­nal that the cen­tral bank has no in­ten­tion to let the yuan move too much." Deal­ers said that in the long term, the yuan's ap­pre­ci­a­tion was an in­evitable trend as China needs to fight against im­ported in­fla­tion. -PB News

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