China’s yuan set for longest weekly winning streak since 2021
2024.08.22 23:56
SHANGHAI (Reuters) – inched higher against a softer dollar on Friday and looked set for the fifth straight weekly gain, its longest winning streak in more than three years.
The yuan was supported by stronger corporate interest in converting their foreign exchange receipts on the back of recent dollar weakness, but gains were capped by market caution ahead of Federal Reserve Chair Jerome Powell’s speech in Jackson Hole, Wyoming, later on Friday.
Powell’ remarks are expected to offer more clues on the monetary policy trajectory in the world’s largest economy and affect global financial markets, traders said.
By 0300 GMT, the yuan was trading 0.07% higher at 7.1428 to the dollar. If it retains all the gains into the late night close, it would have strengthened 0.23% against the dollar for the week, booking its longest weekly winning streak since May 2021.
“Yuan depreciation pressure has been alleviated as we have seen a general weakening of the dollar over the last month or two,” said Lynn Song, chief economist for Greater China at ING.
“The main reason for this is on the external side, as market expectations for Fed rate cuts have grown, and if the Fed cuts rates at a relatively fast pace, yield spreads should move to favour continued recovery of the yuan.”
Song expected policymakers to continue to keep currency stability as a high priority moving forward.
China’s central bank has been setting its daily official yuan midpoint fixing at levels firmer than market projections for more than a year, with traders and analysts widely interpreting it as an official attempt to keep the currency stable and supported.
And the discrepancy between the official guidance and market projections have gradually narrowed over the past few weeks.
On Friday, the People’s Bank of China (PBOC) set the midpoint rate, around which the yuan is allowed to trade in a 2% band, at 7.1358 per dollar, 122 pips firmer than a Reuters’ estimate.
The traded at 7.1425 yuan per dollar, up about 0.06% in Asian trade.
LEVELS AT 0300 GMT:
INSTRUMENT CURRENT UP/DOWN(-) % CHANGE DAY’S HIGH DAY’S
vs USD VS. PREVIOUS YR-TO-DATE LOW
CLOSE %
Spot yuan 7.1428 0.04 -0.57 7.1418 7.1478
Offshore 7.1424 0.06 -0.24 7.1409 7.1486
yuan spot
