SHANGHAI, Oct 11: China’s central bank weakened the official guidance rate for the third straight day on Friday as global markets gained confidence that the U.S. Will find a temporary fix to its budget impasse, supporting the dollar.
The U.S. Dollar index flattened out in overnight trade after hitting a few overnight highs. Markets were confused by conflicting reports about a Republican plan offered to U.S. president Barack Obama to temporarily raise the debt ceiling, avoiding risk of default.
The central bank set the official midpoint rate at 6.1458 per dollar, 0.01 percent weaker than the previous close. The bank let the midpoint hit a record high on Tuesday when markets resumed trade after a week-long holiday.
Spot yuan also weakened negligibly by 0.03 percent to 6.1174.
Traders maintain that despite the relatively high midpoint settings recently, the spot rate is being forcibly held back by major state banks buying up dollars. They suspect these trades are being executed on the behest of the central bank, which wants to keep the exchange rate stable in the run-up to an upcoming government conference at which economic reform is expected to be addressed.
(AGENCIES)
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