Asian Stock Markets
China's yuan extended its losses against the U.S. dollar to a 4-1/2-month low on Wednesday, dragged lower by a weaker midpoint and a buoyant dollar amid Italy's deepening political crisis. The Chinese currency is poised to lose around 1.5 percent for May, its worst month since November 2016.
The renminbi continued to lose momentum as the People's Bank of China (PBOC) was putting up little protests and allowing the currency to "freely adjust" to the surging dollar, he said in a
research note.
The dollar firmed on a weaker euro, which was buried near multi-month lows against major rivals. Investors fear that repeat elections in Italy - which could come as soon as July -may become a de-facto referendum on Italian membership of the currency bloc.
The global dollar index, a gauge that measures the unit's strength against a basket of six major currencies, stood at 94.886 as of midday, near the technical double-top around 95.15 touched in October and November last year.
Prior to market opening, the PBOC lowered its official yuan midpoint for the fifth straight trading day to 6.4207 per dollar, the weakest since Jan. 18. The midpoint was 186 pips or 0.29 percent weaker than the previous fix at 6.4021.
Wednesday's official guidance rate was the lowest since Jan. 18, and also marked the biggest one-day weakening in percentage terms in two weeks.
In the spot market, the onshore yuan opened at 6.4220 per dollar and eased to a low of 6.4290 at one point in morning trade, the lowest since mid-January.
As of midday, the onshore spot was changing hands at 6.4266, 116 pips weaker than the previous late session close and 0.09 percent softer than the midpoint.
The offshore yuan was trading 0.05 percent firmer than the onshore spot at 6.4234 per dollar as of midday.
Traders said losses in the yuan has not yet triggered panic dollar buying in the market, unlike what they witnessed in late 2015 and 2016.
In late 2015 and 2016, strength in the greenback fuelled one-way bets on yuan depreciation and prompted companies and households to stock up on dollars. Continuous selling in the yuan during that period forced major state-owned banks to sell dollars as part of official efforts to prop up the yuan.
The market focused once again on trade frictions between the world's two largest economies after the United States said on Tuesday it would continue pursuing actions on trade with China.
It would impose tariffs on $50 billion of Chinese imports unless Beijing addressed the issue of theft of American intellectual property.
U.S. Commerce Secretary Wilbur Ross is scheduled to visit Beijing from June 2 to June 4.
Guan Tao, a former foreign exchange regulator official, told Reuters in an interview on Tuesday there had been limited impact on the yuan from trade friction between the United States and China so far, while China's shrinking current account surplus will not necessarily lead to yuan depreciation.
HKEX Global CNH index, which tracks the offshore yuan against a basket of currencies on a daily basis, stood at 98.23, firmer than the previous day's 98.2.
Offshore one-year non-deliverable forwards contracts (NDFs), considered the best available proxy for
forward-looking market expectations of the yuan's value, traded at 6.535, 1.75 percent weaker than the midpoint.
One-year NDFs are settled against the midpoint, not the spot rate.
The renminbi continued to lose momentum as the People's Bank of China (PBOC) was putting up little protests and allowing the currency to "freely adjust" to the surging dollar, he said in a
research note.
The dollar firmed on a weaker euro, which was buried near multi-month lows against major rivals. Investors fear that repeat elections in Italy - which could come as soon as July -may become a de-facto referendum on Italian membership of the currency bloc.
The global dollar index, a gauge that measures the unit's strength against a basket of six major currencies, stood at 94.886 as of midday, near the technical double-top around 95.15 touched in October and November last year.
Prior to market opening, the PBOC lowered its official yuan midpoint for the fifth straight trading day to 6.4207 per dollar, the weakest since Jan. 18. The midpoint was 186 pips or 0.29 percent weaker than the previous fix at 6.4021.
Wednesday's official guidance rate was the lowest since Jan. 18, and also marked the biggest one-day weakening in percentage terms in two weeks.
In the spot market, the onshore yuan opened at 6.4220 per dollar and eased to a low of 6.4290 at one point in morning trade, the lowest since mid-January.
As of midday, the onshore spot was changing hands at 6.4266, 116 pips weaker than the previous late session close and 0.09 percent softer than the midpoint.
The offshore yuan was trading 0.05 percent firmer than the onshore spot at 6.4234 per dollar as of midday.
Traders said losses in the yuan has not yet triggered panic dollar buying in the market, unlike what they witnessed in late 2015 and 2016.
In late 2015 and 2016, strength in the greenback fuelled one-way bets on yuan depreciation and prompted companies and households to stock up on dollars. Continuous selling in the yuan during that period forced major state-owned banks to sell dollars as part of official efforts to prop up the yuan.
The market focused once again on trade frictions between the world's two largest economies after the United States said on Tuesday it would continue pursuing actions on trade with China.
It would impose tariffs on $50 billion of Chinese imports unless Beijing addressed the issue of theft of American intellectual property.
U.S. Commerce Secretary Wilbur Ross is scheduled to visit Beijing from June 2 to June 4.
Guan Tao, a former foreign exchange regulator official, told Reuters in an interview on Tuesday there had been limited impact on the yuan from trade friction between the United States and China so far, while China's shrinking current account surplus will not necessarily lead to yuan depreciation.
HKEX Global CNH index, which tracks the offshore yuan against a basket of currencies on a daily basis, stood at 98.23, firmer than the previous day's 98.2.
Offshore one-year non-deliverable forwards contracts (NDFs), considered the best available proxy for
forward-looking market expectations of the yuan's value, traded at 6.535, 1.75 percent weaker than the midpoint.
One-year NDFs are settled against the midpoint, not the spot rate.
No comments:
Post a Comment