Yuan hovers near 3-1/2-year peak ahead of economic data
HONG KONG: China’s yuan edged up to near a 3-1/2-year high against the dollar on Wednesday, as the central bank continued to manage the pace of appreciation against a backdrop of weakness in the U.S currency and ahead of economic activity data later in the day. The yuan last traded a shade stronger at 6.7411 per dollar, hovering near the strongest level since February 2023 of 6.74 hit last week.…
China's yuan traded near a 3-1/2-year peak against the U.S. dollar on Wednesday, as the central bank attempted to control the currency's appreciation amid a weakening dollar and anticipation of economic data. The yuan closed at 6.7411 per dollar, nearing the highest level since February 2023 of 6.74, observed last week. The offshore yuan reached 6.7415 per dollar, up approximately 0.04% in Asian trade.
In contrast, the dollar's six-currency index declined by 0.07% to 99.52, nearing its weakest levels of the month. Unexpectedly, U.S. retail sales dropped in July, indicating a potential delay in interest rate hikes by the Federal Reserve. The yuan has strengthened by 0.7% this month and 3.8% this year. Analysts at CICC anticipate further dollar weakness and policy confirmation to signal a clear trend.
The People's Bank of China set the midpoint rate at 6.7873 per dollar, the strongest level since February 8, 2023, and 491 pips weaker than a Reuters estimate. The spot yuan is permitted to fluctuate a maximum of 2% above or below the fixed midpoint daily. The central bank has been cautiously strengthening its daily yuan guidance, slightly weaker than market expectations, signaling a measured appreciation.
Upcoming economic data, including July's record bank loan contraction, industrial output growth, and retail sales figures, will shed light on China's economic health.
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