SHANGHAI, Nov 21: The Chinese yuan barely moved on Thursday after the central bank set its official midpoint slightly weaker while, large state-owned banks continued buying dollars to help curb pressure for the yuan to appreciate, traders said.
Spot yuan traded at 6.0926 per dollar near midday, almost unchanged from Wednesday’s close of 6.0929.
The People’s Bank of China (PBOC) fixed Thursday’s midpoint at 6.1366, or 0.10 percent weaker than Wednesday’s 6.1305, which was a record high, signalling it has no intention to let the yuan appreciate sharply in the near term, traders said.
PBOC governor Zhou Xiaochuan has dangled the prospect of speeding up currency reforms, but there have been no changes to the domestic market over the past few days, traders said.
The central bank under Zhou has consistently flagged its intention to liberalise financial markets and allow the yuan to trade more freely, even before the Communist Party’s top brass unveiled late last week the boldest set of economic and social reforms in nearly three decades.
But since the 60-point reform plan was released, Zhou has suggested urgency in pushing for change, although he has not provided any specific timetable.
‘The market is not ready for any drastic reforms, with many people having apparently over-interpreted Zhou’s comments,’ said a trader at a Chinese commercial bank in Shanghai.
‘Fulfilling the ambitious plans mapped by Zhou, in particular making the yuan fully convertible under the capital account, will take many years.’
Data issued by PBOC last Friday showed that the central bank, helped by state-controlled lenders, has actually stepped up currency intervention in recent months as the later-than-expected tapering of U.S. Quantitative easing (QE) supported heavy capital inflows into China.
The PBOC and commercial banks purchased 441.6 billion yuan ($72.49 billion) worth of foreign exchange on a net basis in October, jumping from September’s 126.4 billion yuan.
Though imprecise, these purchases serve as a rough proxy for capital inflows into China, traders said.
(AGENCIES)
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