: A Benjamin Franklin U.S. 100-dollar banknote and a Chinese 100-yuan banknote depicting late Chinese chairman Mao Zedong are seen in a picture illustration taken January 21, 2016
SHANGHAI: China's yuan ended domestic trading firmer on Friday after a senior central banker issued a warning against speculators, sparking a recovery from a 22-month low hit earlier in the session.
The onshore spot yuan ended the day at 6.9478 per dollar, 14 pips or 0.02 percent firmer than the previous late night session close, and off the low at 6.9647, the yuan's weakest level since Dec.28, 2016.
If the onshore yuan finishes the late night session at the domestic closing level it will mark a deprciation of 0.27 percent against the the dollar this week.
Pan Gongsheng, a vice governor at the People's Bank of China told a briefing on Friday that Chinese authorities have accumulated rich experience and developed policy tools to cope with currency market volatility.
"For those who are trying to short the renminbi. We are very familiar with each other as we fought hand to hand a few years ago. I think it's still fresh in our memory," Pan said.
Traders said Pan's comments sparked the yuan's recovery.
Despite the turnaround, market participants increasingly expect the yuan will face downward pressure in coming months and could breach 7 per dollar, a level last seen during global financial crisis.
Prior to market opening, the People's Bank of China set the midpoint rate at 6.951 per dollar, 101 pips or 0.15 percent weaker than the previous fix of 6.9409.
Friday's fixing was weaker than market forecasts, as traders had expected the guidance rate to come in above 6.95, a level the market had once believed the central bank would guard more strongly.
Gao Qi, FX strategist at Scotiabank in Singapore, said policymakers need a relatively steady yuan to bolster A-Shares, which have been battered by mounting risks due to share-pledged loans.
"When the risks from share-backed loans are mitigated properly and eliminated finally, USD/CNY and USD/CNH will likely be allowed to rally through 7.00 in an orderly way particularly if the dollar strengthens across the board and if the
U.S.-China tensions escalate further," he said in a note.
In the offshore market, the yuan was trading at 6.9600 per dollar at 0830 GMT.
China stocks slipped on Friday but posted a weekly gain, thanks to Beijing's recent supportive policies and measures that aim to bolster the stock market and the real economy. - Reuters
Win a prize this Mother's Day by subscribing to our annual plan now! T&C applies.
