Yuan set for best day in two weeks


  • Forex
  • Monday, 27 Jul 2020

The Chinese currency was on a strong footing against the global dollar index, which fell more than 0.4% to 93.966, and hitting its lowest since late 2018 during Asia trading.

HONG KONG: The yuan jumped the most in almost two weeks on Monday, capitalising on a battered U.S. dollar, but the advance was checked by US-China tensions which escalated with the abrupt closures of consulates last week.

The onshore yuan firmed 0.24% to trade at 7.0005 per dollar just after midday, set for its strongest session since July 15. The offshore yuan also managed gains of 0.17%, to stand at 7.0025 per dollar, its best in a week.

The Chinese currency was on a strong footing against the global dollar index, which fell more than 0.4% to 93.966, and hitting its lowest since late 2018 during Asia trading.

The greenback is under renewed pressure as U.S.-China ties worsen and also because of a resurgence in Covid-19 coronavirus cases in the United States which risks spoiling the country's economic recovery.

"The renminbi's move today has more to do with the wider global environment," said Carie Li, economist at OCBC Wing Hang Bank in Hong Kong, referring to the yuan's other name.

But while the yuan scaled gains against the dollar, frictions between Beijing and Washington pushed the yuan lower against other peers, said a yuan trader in the onshore market.

Tensions ramped up after the United States ordered the closure of the Chinese consulate in Houston last week. China took over the U.S. consulate premises in Chengdu on Monday morning, as tit-for-tat retaliation.

The Thomson Reuters/HKEX Global CNH index, which tracks the offshore yuan against a basket of currencies on a daily basis, slid to 91.55, from the previous close of 91.64.

"In the near term, the U.S.-China headlines will still create pressure for the renminbi, especially before the November U.S. presidential election," said Li.

The People's Bank of China set the midpoint rate at 7.0029 per dollar prior to market open, weaker than the Reuters estimate of 6.9939. - Reuters

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