Yuan firms to 3-1/2-year high on soft dollar despite weak fix
SHANGHAI: China’s yuan strengthened on Friday to a fresh 3-1/2-year high against the dollar, underpinned by broad dollar weakness, even as the central bank set the official midpoint with the largest weak bias in six months. The spot yuan opened at 6.7180 per dollar and was last trading at 6.7165 as of 0243 GMT, 13 pips firmer than the previous late session close, and the strongest since February…
On Friday, China's yuan hit a fresh 3-1/2-year high against the dollar, rising to 6.7180 per dollar, according to wire material from Shanghai. Federal Reserve Governor Christopher Waller's speech, where he hinted at keeping interest rates steady, contributed to the dollar's weakness, MUFG analysts noted. The People's Bank of China fixed the midpoint rate at 6.7787 per dollar ahead of market opening, but the spot rate was 0.03% higher at 6.7165 by 0243 GMT.
The central bank allowed the yuan to trade 2% above or below the fixed midpoint each day. While domestic firms' willingness to convert dollars to yuan eased slightly, a wait-and-see mood was building in the market, slowing the pace of yuan appreciation. Analysts expect the currency pair to trade between 6.69 and 6.77 in September, with support from a robust export sector and persistent trade surplus.
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