SHANGHAI, Mar 13: China’s yuan firmed against the dollar on Friday after the central bank fixed the official midpoint firmer in line with a slight fall in the greenback in global markets overnight.
The yuan is set to post a 0.1 percent gain for the week if it closes at the current level amid signs that the People’s Bank of China (PBOC) is supporting the currency to soften the impact of the steep rally of the dollar.
By late morning, the spot market was changing hands at 6.2590 per dollar, 34 pips firmer from the previous close. As the dollar index retreated slightly from 12-year high to 99.35 on Thursday night, the PBOC fixed the midpoint rate at 6.1588 per dollar prior to market open, firmer than the previous fix at 6.1617.
China posted a slew of mixed economic data in the past week, with credit and trade data beating expectations, while growth in investment, retail sales and factory output all missed forecasts. Traders said the PBOC was suspected to have used state-owned banks to buy dollars to support the yuan this week so as to cushion the impact of a generally strengthening dollar as well as the slowdown of the growth of China’s economy. In the next few weeks, the yuan is likely to continue a slow depreciation due in part to the potential of a continuation of the dollar’s global rally, but the pace of depreciation would be controlled by the PBOC, traders said. The offshore yuan was trading 0.20 percent weaker from the onshore spot at 6.2715 per dollar.
(AGENCIES)
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