March 2, 2024


General will live on forever


China’s yuan firms as weak loan data overlooked; focus on COVID curbs easing

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HONG KONG — China’s yuan edged up

slightly on Tuesday against the U.S. dollar as investors

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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

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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

given day.

China reported 7,679 new COVID-19 infections on Dec. 12, far

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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

zero-COVID policy.

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

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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

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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

PBOC midpoint


6.9746 6.9565

Spot yuan


6.977 6.9779

Divergence from



Spot change YTD


Spot change since 2005

revaluation 18.63%


Instrument Current Difference

from onshore

Offshore spot yuan

* -0.08%



non-deliverable 2.33%

forwards 6.8158


*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




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