Yuan weakens as dollar rebounds after Fed minutes and crypto crash

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    SHANGHAI, May 20 (Reuters) - China's yuan eased on Thursday
as the dollar rebounded on global markets after minutes from the
last Federal Reserve policy meeting hinted at the possible
tapering of asset sales if the U.S. economic recovery continues
apace.
    Plunges in cryptocurrencies also fueled risk-off sentiment
to support the greenback. That sentiment was reinforced
by Beijing's warning on Tuesday against speculative crypto
trading, and its decision to ban financial institutions and
payment companies from providing services related to
cryptocurrency transactions.
    The firmer dollar pressured the yuan's official guidance
rate and spot prices. Prior to market opening, the People's Bank
of China (PBOC) set the midpoint rate at a one-week
low of 6.4464 per dollar, 209 pips or 0.32% weaker than the
previous fix of 6.4255. 
    In the spot market, onshore yuan opened at 6.4380
per dollar and was changing hands at 6.4382 at midday, 44 pips
weaker than the previous late session close.    
    "Chinese fundamentals are unchanged – real yield
differentials have not tilted materially in favour of the RMB,
and data prints have not improved significantly either,"
analysts at OCBC Bank said in a note, expecting the yuan to
remain on the weaker side of 6.4 per dollar for the time being. 
    Several currency traders said state-run banks appeared to be
buying dollars earlier this week to prevent the yuan from
breaching that level too quickly.
    Zhou Chengjun, head of the financial research institute of
the PBOC, recommended that China should free up the yuan
exchange rate over time to support wider global adoption of the
currency, but his comments had little impact on the market.

    Separately, China kept its benchmark lending rate for
corporate and household loans unchanged for the 13th straight
month at its May fixing on Thursday, in line with expectations.

    "Official goals for reining in credit have already been
achieved by other means. As such, we do not expect any changes
to policy rates in the coming months," said Julian
Evans-Pritchard, senior China economist at Capital Economics.
    
    The yuan market at 0401 GMT: 
    
    ONSHORE SPOT:
 Item               Current  Previous  Change
 PBOC midpoint      6.4464   6.4255    -0.32%
                                       
 Spot yuan          6.4382   6.4338    -0.07%
                                       
 Divergence from    -0.13%             
 midpoint*                             
 Spot change YTD                       1.40%
 Spot change since 2005                28.55%
 revaluation                           
 
    Key indexes:
     
 Item            Current     Previous  Change
                                       
 Thomson         97.36       97.31     0.1
 Reuters/HKEX                          
 CNH index                             
 Dollar index    90.136      90.22     -0.1
 
    
    
*Divergence of the dollar/yuan exchange rate. Negative number
indicates that 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 official midpoint rate it sets each
morning.

    OFFSHORE CNH MARKET   
  
 Instrument            Current   Difference
                                 from onshore
 Offshore spot yuan    6.4384    0.00%
        *                        
 Offshore              6.6065    -2.42%
 non-deliverable                 
 forwards                        
               **                
 
*Premium for offshore spot over onshore
**Figure reflects difference from PBOC's official midpoint,
since non-deliverable forwards are settled against the midpoint.
. 

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

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