Copyright brecorder
SHANGHAI: The yuan came off a near three-week low against the dollar on Thursday, supported by a recovery in global risk appetite and a strong official guidance fix. Onshore yuan was 0.04% higher at 7.1244 per dollar as of 0346 GMT, while its offshore counterpart gained 0.07% to 7.1274. A day earlier, it weakened past the psychologically important 7.13 per dollar level to 7.1344 - a level last seen in mid-October - dragged down by a selloff in US stocks and fresh signs of a slowdown in China’s economy, the world’s second-largest. “Broader dollar signals suggest that the USD/CNH could start to trend lower from here, albeit still within the 7.09-7.15 range,” Maybank analysts said in a note to clients. Before the market open, the People’s Bank of China set the midpoint rate at 7.0865 per dollar, its strongest since October 30 and 357 pips firmer than a Reuters’ estimate of 7.1222. The spot yuan is allowed to trade 2% either side of the fixed midpoint each day. Market participants are expected to shift their attention to China’s economic data for more clues on the health of the economy. Trade data will be released on Friday, inflation figures are due on Sunday while credit data and other indicators of economic activity such as retail sales are scheduled for next week. “Weak fundamentals can result in lower deposit rates and weak credit demand, creating more excess liquidity in the financial system,” said Larry Hu, chief China economist at Macquarie. Some currency traders also said gains for Chinese A shares helped lift the yuan. The Shanghai benchmark gained 0.9% on Thursday, climbing above the key 4,000 point level.
