HONG KONG — China’s yuan edged up
slightly on Tuesday against the U.S. dollar as investors
shrugged off weak China loan data and looked to an eventual
economic recovery as COVID-19 curbs are eased further.
Data released on Monday showed that new bank lending in
November rebounded less than expected, totalling 1.21 trillion
yuan ($173.38 billion), short of analysts’ consensus forecast of
1.35 trillion yuan.
“We believe credit demand will likely remain fragile over
the next few months, as China goes through the temporary shocks
at the early stages of reopening,” said Helen Qiao, China and
Asia economist at Bank of America, in a report Tuesday.
But credit demand should rebound after the first quarter of
2023 as consumer spending and the property market gradually
recover, Qiao said.
The spot yuan opened at 6.9856 per dollar and was
changing hands at 6.9770 at midday, 9 pips strong than the
previous late session close, and 0.03% away from the midpoint.
The People’s Bank of China set the midpoint rate
at 6.9746 per U.S. dollar prior to market open, weaker than the
previous fix of 6.9565. The spot rate is currently allowed to
trade with a range 2% above or below the official fixing on any
China reported 7,679 new COVID-19 infections on Dec. 12, far
lower than the more than 30,000 reported per day in late
November. The drop has come amid the government doing less
testing on its population as part of a broad relaxation of its
Qin Gang, China’s ambassador to the United States, said on
Monday he believes China’s COVID-19 measures will be further
relaxed in the near future and international travel to the
country will become easier.
The global dollar index fell to 104.986 from the
previous close of 105.131.
The dollar was firm on Tuesday ahead of the release of U.S.
inflation data on Tuesday and the final Federal Reserve meeting
of the year on Wednesday, with investors waiting to update their
interest rate outlooks.
The offshore yuan was trading 0.08% weaker from the
onshore spot at 6.9826 per dollar.
The rally seen in the offshore yuan, which rose 0.7% last
week, will likely abate, analysts said. A possible rebound of
the dollar after the Federal Reserve meeting, and a cooling off
of optimism on China reopening its economy post-COVID will weigh
on the offshore yuan to take it beyond the 7 per dollar level.
“The refinements thus far to COVID management policies have
been mostly priced in and any news of death counts surging or
hospitals coming under strains could still swing the [offshore
yuan [to the weaker side of] 7,” said Fiona Lim, an analyst at
Offshore one-year non-deliverable forward contracts
(NDFs), considered the best available proxy for
forward-looking market expectations of the yuan’s value, traded
at 6.8158, 2.33% away from the midpoint.
One-year NDFs are settled against the midpoint, not the spot
The yuan market at 3:27AM GMT:
Item Current Previous Change
Spot change YTD
Spot change since 2005
OFFSHORE CNH MARKET
Instrument Current Difference
Offshore spot yuan
*Premium for offshore spot over onshore
**Figure reflects difference from PBOC’s official midpoint,
since non-deliverable forwards are settled against the midpoint.
($1 = 6.9788 Chinese yuan renminbi)
(Reporting by Georgina Lee; Editing by Muralikumar