China's yuan edges up after record-high midpoint fixing
HONG KONG, Sept 16 (Reuters) - China's yuan edged up slightly against the dollar on Monday after the central bank set a record high midpoint to reflect an overnight decline of the U.S. dollar, boosting expectations that the currency may gain for the third consecutive month. The yuan has risen 1.8 percent so far this year, with mos tof the gains made in April and June, while most other emerging market currencies have suffered falls, Spot yuan traded at 6.1178 per dollar near midday, up 0.02 percent from the previous close. The People's Bank of China (PBOC) fixed the yuan's midpoint at 6.1554, or 0.04 percent firmer than Friday's 6.1578. Traders said strong economic data from China should support the yuan, but it was likely to stay range-bound until the U.S. Federal Reserve announces its plan to taper bond purchases. The Fed's key policy setting committee meets on Tuesday and Wednesday "I doubt whether the yuan spot could breach 6.11 in the coming two weeks," said a trader at a Chinese bank in Shanghai. Some traders suspected the PBOC might be intervening in the spot market to prevent its currency from rising too fast, in order to gradually achieve its aim of narrowing the gap between yuan midpoint fixing and spot rate. The world's second-largest economy's strong economic indicators in August and bright outlook have made several investment banks, including Deustche Bank and UBS, upgrade forecasts for GDP growth recently. China should hit its growth target of 7.5 percent this year, World Bank Group President Jim Yong Kim said on Sunday. News that Lawrence Summers, perceived as relatively hawkish and less in favour of quantitative easing, has pulled out of the Fed race, would be genrally supportive for Asian currencies, Credit Agricole said in a note sent to clients.
The onshore spot yuan market at a glance:
Item Current Previous Change (pct) PBOC midpoint 6.1554 6.1578 0.04% Spot yuan 6.1178 6.1188 0.02% Divergence from midpoint* -0.61%
Spot change ytd 1.84% Spot change since 2005 revaluation 35.29%
*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 1 percent from official midpoint rate it sets each morning.
OFFSHORE CNH MARKET
The offshore yuan market at a glance:
Instrument Current Difference from onshore
Offshore spot yuan 6.1116 0.10% Offshore non-deliverable 6.203 -0.77%
*Premium for offshore spot over onshore
**Figure reflects difference from PBOC's official midpoint, since non-deliverable forwards are settled against the midpoint. .
>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>> RECENT DEVELOPMENTS - Yuan rally starts to fade as capital inflows to China slow
- ANALYSIS-Bullish yuan herd leaves China fundamentals in the dust - Currency war or no, Beijing doesn't want Asia to take stable yuan for granted - China opens new front in money war as yuan speculation distorts export data
KEY DATA POINTS - Gap between PBOC midpoint and spot rate is narrowing. GRAPHIC: http://link.reuters.com/qyx74t - China's trade surpluses mainly driven by weak imports rather than strong exports. GRAPHIC: http://link.reuters.com/qav68s - Corporate FX purchases in May show reduction in yuan appreciation expectations. GRAPHIC: http://link.reuters.com/tyx74t - Hot money inflows turn to outflows in May GRAPHIC: http://link.reuters.com/saz74t - Despite relatively stable dollar/yuan exchange rate, the yuan is appreciating on a trade-weighted basis. GRAPHIC: http://link.reuters.com/sed74t
(Editing by Simon Cameron-Moore)