SHANGHAI, April 9 (Reuters) - China's yuan was flat against
the dollar on Friday, despite worries over deteriorating
Sino-U.S. ties following the addition of seven Chinese
supercomputing entities to a U.S. economic blacklist for
assisting Chinese military efforts.
Many traders and analysts expect the yuan to come under
pressure unless the Biden Administration improves relations with
China that had soured during Donald Trump's presidency.
The onshore yuan opened at 6.5470 per dollar and
was changing hands at 6.5519 at midday, 3 pips weaker than the
previous late session close.
Inflation data released on Friday raised some expectations
that People's Bank of China (PBOC) will eventually tighten its
monetary policy stance, which would support the yuan, but with
the focus currently on sustaining the economy's recovery from
the pandemic there was little prospect for an early increase in
interest rates.
China's consumer prices returned to inflation in March after
two months of falls, while factory gate prices beat analyst
expectations to rise at their fastest annual pace since July
2018, in the latest sign that a recovery in the world's
second-largest economy is gathering momentum.
"Inflation has regained policy focus in China as emphasised
by Vice Premier Liu He during the State Council meeting
yesterday, but we believe the PBOC will not react immediately to
the latest data," Xing Zhaopeng, senior China strategist at ANZ
in Shanghai said in a note. Xing expected that the PBOC to hold
policy steady until the job market improved.
Liu told a meeting of the Financial Stability and
Development Committee on Thursday that China will implement
prudent monetary policy and keep the yuan exchange rate
basically stable at reasonable and balanced levels.
If the onshore spot yuan finishes the late night session at
the midday level, it would have gained 0.24% for the week,
snapping seven straight weeks of decline to book the best weekly
performance since late January.
Prior to market opening, the PBOC set the midpoint rate
at 6.5409 per dollar, 54 pips or 0.08% firmer than
the previous fix of 6.5463.
The global dollar index rose to 92.121 at midday,
while the offshore yuan was trading at 6.5592 per
dollar.
The yuan market at 0400 GMT:
ONSHORE SPOT:
Item Current Previous Change
PBOC midpoint 6.5409 6.5463 0.08%
Spot yuan 6.5519 6.5516 0.00%
Divergence from 0.17%
midpoint*
Spot change YTD -0.36%
Spot change since 2005 26.32%
revaluation
Key indexes:
Item Current Previous Change
Thomson 96.35 96.46 -0.1
Reuters/HKEX
CNH index
Dollar index 92.121 92.074 0.1
*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 6.5592 -0.11%
*
Offshore 6.733 -2.85%
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 Simon
Cameron-Moore)
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