SHANGHAI, Mar 11: China’s yuan edged down against the dollar on Monday morning after the greenback gained in global markets in response to strong U.S. Job growth and mixed economic data from China.
Spot yuan fell to 6.2177 per dollar by midday, down 0.05 percent from Friday.
The spot rate’s decline closely tracked the central bank’s daily midpoint. The People’s Bank of China (PBOC) set its fixing at 6.2769 on Monday, 0.08 percent weaker than Friday’s fix.
The PBOC typically fixes the yuan weaker when the dollar gains in global market.
The dollar bolted to a seve-month high on Friday after the stronger-than-expected U.S. Employment report.
Data out over the weekend showed uneven progress in China’s economic recovery. Industrial production and retail sales both grew more slowly than expected, while inflation was faster than analysts had forecast.
That followed data on Friday weekend showing a surge in exports but weak imports in February..
Traders say that client demand for the Chinese currency remains strong. Recent data showing strong foreign exchange purchases by both corporates and banks supports this impression.
But the PBOC appears keen to keep the yuan steady amid fears of a ‘currency war’ centred in Asia. Deputy PBOC governor Yi Gang said last week that China stands ready to respond if Japan and others launch competitive devaluations. The Japanese yen has resumed its weakening trend in recent days after brief pause.
China has so far refrained from weakening its currency in response to the sharp decline in the yen since late November. But in addition to using its midpoint to hold appreciation pressure in check, traders the PBOC has also apparently engaged in small, ad hoc interventions to prevent the yuan from appreciating too quickly.
Most traders expect the Chinese currency to hold steady around 6.22 to 6.24 in the coming weeks. (AGENCIES)
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