SHANGHAI, April 26 (Reuters) - China's yuan inched up
against the dollar on Monday, while investors awaited key policy
meetings at home and abroad for more clues about policymakers'
priorities that could affect exchange rates.
Markets expect U.S. Federal Reserve Chairman Jerome Powell
to shun talks of tapering bond purchases at this week's policy
meeting, which is set to end on Wednesday, with such
expectations pressuring U.S. Treasury yields and the dollar.
Prior to the market opening, the People's Bank of China
(PBOC) set the midpoint rate at 6.4913 per dollar, 21
pips firmer than the previous fix of 6.4934.
In the spot market, the onshore yuan opened at
6.4855 per dollar and was changing hands at 6.4880 at midday, 83
pips firmer than the previous late session close.
Traders said the yuan was likely to track the dollar and
swing in a thin range before the outcome of the Fed meeting.
Many market participants were also awaiting the April
politburo meeting, the top decision-making body of China's
ruling Communist Party, for comments and guidance on policy
deliberations.
"In the upcoming April Politburo meeting, policymakers
should maintain the current policy tone of 'no sharp turn', but
tighten more on the margin," Larry Hu, chief China economist at
Macquarie, said in a note.
A trader at a Chinese bank said markets were anxious to
confirm that an imminent policy tightening could be delayed
after China reported slightly weaker-than-expected first quarter
GDP.
"The improving market sentiment due to easing fears over
(premature) tightening supported RMB asset prices, which also
underpinned RMB's outlook in the near term," said Tommy Xie,
head of Greater China research at OCBC Bank.
The yuan posted its third straight weekly gain last week,
while official data also showed that the yuan's CFETS index
basket, a gauge that measures the yuan's strength
against major trading partners, snapped three straight weeks of
losses.
The country's foreign exchange trading platform releases
data on a weekly and monthly basis.
"PBOC's policy exit won't be easy this round, requiring
extra caution and a careful policy calibration to avoid
unpleasant fallouts," Citi analysts said in a note.
As of midday, the global dollar index fell to 90.718
from the previous close of 90.892, while the offshore yuan
was trading at 6.484 per dollar.
The yuan market at 0402 GMT:
ONSHORE SPOT:
Item Current Previous Change
PBOC midpoint 6.4913 6.4934 0.03%
Spot yuan 6.488 6.4963 0.13%
Divergence from -0.05%
midpoint*
Spot change YTD 0.62%
Spot change since 2005 27.57%
revaluation
Key indexes:
Item Current Previous Change
Thomson 96.53 96.62 -0.1
Reuters/HKEX
CNH index
Dollar index 90.718 90.892 -0.2
*Divergence of the dollar/yuan exchange rate. Negative number
indicates that spot yuan is trading stronger than the midpoint.
The People's Bank of China (PBOC) allows the exchange rate to
rise or fall 2% from official midpoint rate it sets each
morning.
OFFSHORE CNH MARKET
Instrument Current Difference
from onshore
Offshore spot yuan 6.484 0.06%
*
Offshore 6.6577 -2.50%
non-deliverable
forwards
**
*Premium for offshore spot over onshore
**Figure reflects difference from PBOC's official midpoint,
since non-deliverable forwards are settled against the midpoint.
.
(Reporting by Winni Zhou and Andrew Galbraith; Editing by Sam
Holmes)
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