© Bloomberg. Chinese one-hundred yuan banknotes are arranged for a photograph in Hong Kong, China, on Thursday, April 23, 2020. The People’s Bank of China (PBOC) has cut short- and medium-term rates recently on top of liquidity injections, loan rollovers and easier regulatory rules. Photographer: Paul Yeung/Bloomberg


(Bloomberg) — China set its daily yuan fixing at a weaker-than-expected level, the first signal that policy makers may want to rein in this quarter’s rapid appreciation in the currency.

The People’s Bank of China’s reference rate was set at 6.7872 on Tuesday, after the spot rate weakened 0.51% overnight. That’s almost 60 basis points weaker than the average estimate in a Bloomberg survey, the largest gap on the weak side in about two months.

Still, the currency strengthened 0.22% to 6.7897 per dollar as of 9:35 a.m. in Shanghai.

“The market is growing increasingly concerned that the PBOC will guide the yuan weaker due to the rapid rally in the currency recently,” said Tommy Xie, an economist at Oversea Chinese Banking Corp. “We need to see a few more days’ fixings to see if the central bank can no longer tolerate the advance. Right now, investors still like to long the yuan given the strong fundamentals.”

The yuan was on track for its biggest ever quarterly gain in Bloomberg data going back to 1981, before a rebound in the greenback triggered a three-day slide in the Chinese currency. While a slump in the dollar has helped, Chinese media has attributed the gains to the nation’s economic recovery. It’s still up 4.1% since the end of June.

The PBOC had also helped by not standing in its way, which for some in the market was an incentive for the currency to push higher. The fixing limits the yuan’s move to 2% in either direction.

©2020 Bloomberg L.P.

Disclaimer: Fusion Media would like to remind you that the data contained in this website is not necessarily real-time nor accurate. All CFDs (stocks, indexes, futures) and Forex prices are not provided by exchanges but rather by market makers, and so prices may not be accurate and may differ from the actual market price, meaning prices are indicative and not appropriate for trading purposes. Therefore Fusion Media doesn`t bear any responsibility for any trading losses you might incur as a result of using this data.

Fusion Media or anyone involved with Fusion Media will not accept any liability for loss or damage as a result of reliance on the information including data, quotes, charts and buy/sell signals contained within this website. Please be fully informed regarding the risks and costs associated with trading the financial markets, it is one of the riskiest investment forms possible.

Source link