Yuan Rises in Restricted Trade, Market Awaits US Inflation Data

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SHANGHAI, June 9 (Reuters)The Chinese yuan strengthened against the dollar in restricted trade on Wednesday, with the market focusing on the upcoming US inflation data for clues as to when the Federal Reserve may begin to reduce its monetary stimulus. FRX /

Traders said the spot yuan continued to hover around the 6.4 per dollar level, with many investors taking a “wait-and-see” approach ahead of Thursday’s US inflation data and European Central Bank meeting (BCE).

In the spot market, the onshore yuan CNY = CFXS opened at 6.3975 to the dollar and changed hands at 6.3949 by noon, 61 pips firmer than the close of the previous session.

The spot yuan has remained in a narrow range of around 50 pips, while the volume of trade CNYSPTVOL = CFXT fell to $ 12.17 billion by noon, from normal volume of around $ 15 billion in the half-day.

Before the market opened, the People’s Bank of China (PBOC) set the median rate CNY = PBOC at 6.3956 per dollar, 47 pips lower than the previous patch of 6.3909.

The market barely reacted to the Producer Price Index (PPI) data showing that China’s ex-factory prices rose at their fastest annual pace in more than 12 years in May.

“The recent appreciation of the RMB has done little to contain the surge in commodity prices as well as the PPI,” said Ken Cheung, chief Asian currency strategist at Mizuho Bank in Hong Kong.

“After all, it appears that the pass-through of the higher PPI to CPI inflation has been rather moderate and gradual … Domestically, the PBOC should not have to urgently tighten its policy. rate hike cycle for now, given the still benign CPI inflation below the annual target of around 3%. “

Elsewhere, the head of the Russian financial markets lobby group said this week that Russia could issue OFZ government bonds denominated in Chinese yuan within two years.

At noon, the world dollar index = USD fell to 90.085 from the previous close of 90.127, while the offshore yuan CNH = D3 was trading at 6.3942 to the dollar.

The yuan market at 0402 GMT:

PLACE ON LAND:

Item

Current

Previous

Switch

Midpoint of PBOC CNY = SAEC

6.3956

6.3909

-0.07%

Yuan spot CNY = CFXS

6.3949

6.401

0.10%

Divergence from midpoint *

-0.01%

Cash change for the current year

2.09%

Spot change since 2005 revaluation

29.42%

Key indexes:

Item

Current

Previous

Switch

Thomson Reuters / HKEX CNH Index

97.71

97.82

-0.1

Dollar index

90,085

90,127

0.0

* Divergence in dollar / yuan exchange rate. A 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 rise or fall 2% from the official median rate it sets each morning.

CNH OFFSHORE MARKET

Instrument

Current

Difference with onshore

Cash yuan off CNH = *

6.3942

0.01%

Offshore not deliverable in the future CNY1YNDFOR = **

6.551

-2.37%

* Premium for the offshore spot on onshore CNY = CFXS

** The figure reflects the difference from the official midpoint of the PBOC, as undeliverable futures are settled relative to the midpoint. CNY = SAEC.

(Reporting by Winni Zhou and Andrew Galbraith; Editing by Simon Cameron-Moore)

(([email protected]; +86 21 2083 0100; Reuters messaging: [email protected]))

The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.

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