HomeBusinessChina's Yuan Heads To Third Weekly Gain, Investors Expect Third Quarter GDP

China’s Yuan Heads To Third Weekly Gain, Investors Expect Third Quarter GDP


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SHANGHAI – The Chinese yuan rose little by little

against the dollar on Friday and looked ready for the third time in a row

weekly gain as investors expected key economic data to be released next

week for more clues on the policy outlook.

While growth momentum is clearly slowing, compounded by

recent and widespread power shortages, traders said investors were

reluctant to place large bets on both sides of the yuan before

GDP data for September and the third quarter of China next Monday.

Prime Minister Li Keqiang said this week that China has extensive tools


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cope with economic challenges despite slowing growth, and

the government hopes to achieve year-round development


Before the market opening, the People’s Bank of China

(PBOC) set the average rate at 6.4386 per dollar, 28

firmer pips than the previous arrangement of 6.4414, the strongest since

16 of September

In the spot market, the onshore yuan opened at 6.4350

per dollar and changed hands at 6.4361 at noon, 43 pips

firmer than the close of the last previous session.

If the yuan ends the night session at noon

level, it would have gained 0.12% against the dollar during the week.

Traders said a slight strength in the yuan on Friday morning.

occurred after the central bank fully refinanced the maturity

medium-term loans, without adding more cash to the


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system or adjusting the interest rate.

The constant cost of indebtedness of the credit line in the medium term

(MLF) eased market fears of a potential yield contraction

gap between China and the United States, said a trader in a

Chinese bank.

A decreasing return premium could lead to capital outflows of

China and add depreciation pressure on the yuan.

Still, investors hotly argued whether the Chinese

central bank would further relax its currency setup to support

the economy, with some citing stagflation risks.

“Larger tranches of the MLF due in November-December, as well as

The payments due could mean that this is the right time for a

reduction of the reserve requirement rate (RRR), especially given the

weaker credit growth in September, ”Maybank analysts said in


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a note.

A total of 1.95 trillion yuan in MLF loans is established for

expire in the rest of the year, and some market analysts expect

the tax payment could reach 1.4 trillion yuan this month.

“Despite the weaker economic momentum, we expect the CNY

strength to continue longer, supported by a continuous force

Fundamentals and probably less conflictive relationships between

and China, ”Standard Chartered analysts said in a


“Exports are likely to remain at record levels, if they do not increase

in addition, in the fourth quarter, as indicated by a continued increase in shipping

container costs, “they said, expecting the yuan to trade at a

they range between 6.4 and 6.6 in the last three months of the year.

U.S. Trade Representative Katherine Tai said Thursday


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that his conversations with Chinese Vice Premier Liu had a

“Good start” last week and he planned to increase the

non-compliance with phase 1 of the trade agreement in future discussions.

At noon, the global dollar index fell to 93.94 from

the previous close of 94,041, while the offshore yuan

It was trading at 6,435 to the dollar.

The yuan market at 0401 GMT:


Item Current Previous Change

PBOC midpoint 6.4386 6.4414 0.04%

Yuan cash 6.4361 6.4404 0.07%

-0.04% divergence

midpoint *

Cash change to date 1.43%

One-off change since 2005 28.59%


Key indices:

Item Current Previous Change

Thomson 100.02 100.03 0.0

Reuters / HKEX

CNH Index

Dollar index 93.94 94.041 -0.1

* Divergence of the dollar / yuan exchange rate. Negative number

indicates that the spot yuan is trading stronger than the midpoint.

The People’s Bank of China (PBOC) allows the exchange rate to

raise or lower 2% of the official midpoint rate established by each



Instrument current difference

from land

Yuan cash offshore 6,435 0.02%


Offshore 6.62 -2.74%

not deliverable



* Premium for offshore spot over onshore

** The figure reflects the difference from the official PBOC midpoint,

as undeliverable forwards are settled against the midpoint.


(Reporting by Winni Zhou and Andrew Galbraith; Editing by Kim




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