Breaking News
Investing Pro 0
Cyber Monday SALE: Up to 54% OFF InvestingPro+ CLAIM OFFER

China's yuan snaps eight-day losing streak after strong PBOC warning

Economy Sep 29, 2022 05:32
Saved. See Saved Items.
This article has already been saved in your Saved Items
 
© Reuters. FILE PHOTO: A China yuan note is seen in this illustration photo May 31, 2017. REUTERS/Thomas White/Illustration/
 
USD/CNY
-0.01%
Add to/Remove from a Portfolio
Add to Watchlist
Add Position

Position added successfully to:

Please name your holdings portfolio
 

SHANGHAI (Reuters) -China's yuan bounced on Thursday from a 14-year low against the dollar hit in the previous session, snapping eight straight days of losses, after the central bank warned against speculative trading and heavy one-way bets on the currency.

The People's Bank of China (PBOC) said on Wednesday that stabilising the foreign exchange market is the top priority, and reiterated that the yuan has a solid basis to be basically stable.

The statement "illustrated PBOC's further concerns on the rapid depreciation of the currency ... (though) the PBOC would not defend a particular level of the exchange rate especially given the depreciation was driven by continued appreciation of the broad USD," analysts at Goldman Sachs (NYSE:GS) said in a note.

Prior to the market opening, the PBOC set the midpoint rate at 7.1102 per dollar, 5 pips firmer than the previous fix of 7.1107.

In the spot market, the onshore yuan finished the domestic session at 7.2 per dollar, 20 pips stronger than the previous late night close of 7.2020.

The yuan hit a low of 7.2521 per dollar on Wednesday, its weakest level since the global financial crisis of 2008.

The offshore yuan also rebounded from its lowest level on record hit a day earlier to trade at 7.2079 per dollar around 0830 GMT.

Currency traders said a retreat in dollar index, along with the PBOC's verbal warnings, helped lift the yuan in morning deals.

The rare strong tone of the warning discouraged many investors from testing new lows in the yuan, said a trader at a foreign bank.

China's FX regulator chimed in on Thursday afternoon, saying it would improve its market-based, counter-cyclical adjustment mechanism of the FX market to properly react to external shocks in the second half of this year.

Separately, the state-owned Securities Times said in a front-page commentary on Thursday that the yuan is unlikely to continue depreciating rapidly.

Market participants usually view such official remarks and state media commentaries as a sign that authorities are growing uncomfortable with rapid currency movements.

But some analysts said as long as the Federal Reserve continues to raise interest rates aggressively to tame high inflation, the yuan could still face pressure. China is bucking the global tightening trend and continues to ease policy to support its faltering economy.

"We expect upward pressure on USD/CNY to persist amid aggressive Fed hikes," analysts at ANZ said in note.

"Even though the PBOC will continue to pace the rise in USD/CNY, we expect upward pressure to take the pair to 7.20 by early 2023."

China's yuan snaps eight-day losing streak after strong PBOC warning
 

Related Articles

Add a Comment

Comment Guidelines

We encourage you to use comments to engage with users, share your perspective and ask questions of authors and each other. However, in order to maintain the high level of discourse we’ve all come to value and expect, please keep the following criteria in mind: 

  • Enrich the conversation
  • Stay focused and on track. Only post material that’s relevant to the topic being discussed.
  • Be respectful. Even negative opinions can be framed positively and diplomatically.
  •  Use standard writing style. Include punctuation and upper and lower cases.
  • NOTE: Spam and/or promotional messages and links within a comment will be removed
  • Avoid profanity, slander or personal attacks directed at an author or another user.
  • Don’t Monopolize the Conversation. We appreciate passion and conviction, but we also believe strongly in giving everyone a chance to air their thoughts. Therefore, in addition to civil interaction, we expect commenters to offer their opinions succinctly and thoughtfully, but not so repeatedly that others are annoyed or offended. If we receive complaints about individuals who take over a thread or forum, we reserve the right to ban them from the site, without recourse.
  • Only English comments will be allowed.

Perpetrators of spam or abuse will be deleted from the site and prohibited from future registration at Investing.com’s discretion.

Write your thoughts here
 
Are you sure you want to delete this chart?
 
Post
Post also to:
 
Replace the attached chart with a new chart ?
1000
Your ability to comment is currently suspended due to negative user reports. Your status will be reviewed by our moderators.
Please wait a minute before you try to comment again.
Thanks for your comment. Please note that all comments are pending until approved by our moderators. It may therefore take some time before it appears on our website.
 
Are you sure you want to delete this chart?
 
Post
 
Replace the attached chart with a new chart ?
1000
Your ability to comment is currently suspended due to negative user reports. Your status will be reviewed by our moderators.
Please wait a minute before you try to comment again.
Add Chart to Comment
Confirm Block

Are you sure you want to block %USER_NAME%?

By doing so, you and %USER_NAME% will not be able to see any of each other's Investing.com's posts.

%USER_NAME% was successfully added to your Block List

Since you’ve just unblocked this person, you must wait 48 hours before renewing the block.

Report this comment

I feel that this comment is:

Comment flagged

Thank You!

Your report has been sent to our moderators for review
Continue with Google
or
Sign up with Email