Phone

+123-456-7890

Email

mail@domain.com

Opening Hours

Mon - Fri: 7AM - 7PM

HONG KONG – China’s onshore yuan rose for the first time in nine sessions after the central bank issued verbal warnings against currency speculation.

The currency rose 0.1% on Thursday, stopping an eight-session slide of about 3%. The rise comes after the People’s Bank of China (PBOC) made a strongly worded statement late Wednesday that speculators will definitely lose money in the long run and that major market participants should “protect their powers of correction.” was introduced after the announcement of It also set the correction at a level stronger than expected in 26 consecutive sessions.

The daily reference rate, Beijing’s most widely used tool for guiding yuan forecasts, has done little to contain the yuan’s weakness amid a surging US dollar. Over the past week, the onshore renminbi against the dollar has traded near the lower end of its 2% trading range. This shows that traders are sticking to their bearish bets on the renminbi as the dollar rises. Local economy suffers from Covid-19 lockdown And turmoil in the real estate sector.

“The yuan exchange rate turned out to be a bearish trap and the People’s Bank of China’s harsh warning was well timed,” said Fiona Lim, senior forex strategist at Malayan Banking in Singapore. Still, the dollar-offshore renminbi pair is likely to remain strong at current levels, with the direction of the US dollar still the dominant factor in the pair, she said.

The onshore renminbi has fallen about 4% against the dollar this month, recording its worst annual loss since 1994. Back in 2010.

The offshore renminbi fell 0.5% to $7.1963 at 11:33 am local time.

A commentary in local newspaper Securities Times also tried to calm market fears caused by the weaker yuan. The yuan’s depreciation against the dollar has been slower than other currencies, and investors should take a rational look at its movements, the report said.

As the dollar continues to soar, the PBOC headaches are shared by policymakers around the world. China’s central bank is also having to walk a tough tightrope between boosting an economy that is at increased risk of recession without spurring a weaker yuan. After abruptly cutting key rates in August, the PBOC paused easing this month. Some economists expect key stimulus measures such as interest rate cuts and bank reserve requirement cuts to be delayed to avoid further pressure on the currency.

Onshore yuan trading will be closed next week for a local holiday, and the offshore sector will be unanchored ahead of a major party convention next month. Earlier this week, the People’s Bank of China imposed a 20% risk reserve requirement on currency futures trading by banks, making short selling of the yuan more expensive. This follows an earlier move to reduce banks’ foreign exchange reserve requirements.bloomberg

https://www.straitstimes.com/business/economy/china-warning-on-speculation-sparks-first-renminbi-gain-in-nine-days China’s speculation warning triggers first yuan rise in nine days

Recommended Articles