Yuan firmed to near a one-week high against dollar
Chinese yuan firmed close to a one-week high versus the U.S. dollar on July 29. The currency fully recovered from losses witnessed earlier this week thanks to a dip in the dollar on global markets and a sharp recovery in China’s share markets.
The U.S. dollar hovered around a two-week low. The decline came Federal Reserve chairman Jerome Powell announced that rate rises are still some way off.
On Thursday morning trade, China and Hong Kong stocks recovered sharply after a series of official efforts to boost investor confidence.
Moreover, the PBOC set the midpoint rate at 6.4942 per dollar. Remarkably, it is 13 pips weaker than the previous fix of 6.4929.
In the spot market, the onshore yuan stood at 6.4840 against the dollar and increased to a high of 6.4724. Significantly, this is the strongest level unseen since July 23. By midday, the onshore yuan was changing hands at 6.4755 (150 pips firmer than the prior session close).
Over the week, the yuan declined below the 6.50 per dollar mark. Stocks dropped more than 4%. Meanwhile, the Chinese 10-year government bond futures slipped 0.4%.
Notably, previous data revealed that investors reducing their long bets on the yuan since June. However, they became bearish this week after the Asian giant raised scrutiny over education, technology, and property sectors. It sparked uncertainty over future investments in the country.
the Chinese yuan is expected to continue trading in a range of 6.45 to 6.5 per dollar
According to traders, onshore and offshore yuan recovered to the firmer side of the 6.5 per dollar level on Thursday morning. The recovery started following the rebound in the stock market, as investor concern over risks of sharp capital outflows weakened.
Some traders expect the yuan to continue trading in a range of 6.45 to 6.5 per dollar seen last week. However, some analysts say that the event risks might take a while before fully recovered, despite the price recovery.
Remarkably, the People’s Bank of China injected 30 billion yuan through open market operations earlier in the session.
Moreover, by midday, the global dollar index declined to 92.166, while in the previous session, it stood at 92.258. The offshore yuan stood at 6.4786 against the dollar.
Meanwhile, the risk-sensitive Australian dollar was last up around 0.1% at $0.7379. The currency was capped by concerns over an extended lockdown in Sydney that is likely to drag on the national economy.
Its New Zealand counterpart increased 0.2% to $0.6971.
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