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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
goals.
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
qualification.
“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:
PLACE ON LAND:
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%
revaluation
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
Tomorrow.
OFFSHORE MARKET CNH
Instrument current difference
from land
Yuan cash offshore 6,435 0.02%
*
Offshore 6.62 -2.74%
not deliverable
forward
**
* 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
Coghill)
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