HONG KONG, Nov 28: The Chinese yuan was stable against the U.S. Dollar on Thursday, with traders watching the central bank for any guidance ahead of a visit by U.S. Vice President Joe Biden.
Spot yuan traded at 6.0925 per dollar, a level it has clung to for most of this week and virtually unchanged from the previous close. The People’s Bank of China fixed the daily yuan midpoint fixing marginally weaker at 6.1343 per dollar.
In the absence of any fresh triggers, traders were wary of chasing the Chinese currency higher, as a short rally in October was cut short by heavy dollar buying by state run banks, likely on the behest of the central bank.
However, Biden’s trip to Beijing next week may see the Chinese authorities allow the yuan to trade out of its narrow range, in a nod to U.S. Complaints that an undervalued yuan gives China an unfair advantage in global trade.
Biden is due to visit China, Japan and South Korea during a week-long trip.
The central bank has controlled the pace of yuan rises since the currency’s landmark revaluation in 2005, and often appeared ready to allow the currency to appreciate during major political events, such as meeting between Chinese and U.S. Leaders.
Biden’s visit has prompted some speculation on betting on more yuan gains in the non-deliverable markets and in the offshore yuan market in Hong Kong.
While the spread between the offshore and the onshore yuan has narrowed from a near 2013 high of more than 300 pips tested on Nov. 19, it still remains near a chunky 100 pips.
The yuan has appreciated 2.3 percent so far this year, making it the best performing currency in emerging Asia.
A poll published last week saw the largest long positions built in the Chinese yuan in about a month, a survey of 13 currency analysts showed, as China’s central bank chief Zhou Xiaochuan dangled the prospect of speeding up reforms.
(agencies)_
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