Latest news with #JuWang
Mint
5 days ago
- Business
- Mint
China Seeks to Slow Yuan's Gains After Months of Propping It Up
The dollar's extended slide has prompted China's central bank to change tack in managing its currency, as it pivots from supporting the yuan to guarding against the risk of a rapid appreciation. The People's Bank of China fixed the yuan's daily reference rate at a slightly weaker level than market forecasts on Monday and Tuesday, after setting it stronger for most of the past six months. The PBOC is also on track to pause bill sales in Hong Kong for a third month, the longest run since 2018, leaving liquidity ample and easing upward pressure on the yuan. Adding to that, state-owned banks have been spotted buying dollars in the onshore market in recent weeks as they try to slow the Chinese currency's gains, according to traders. The PBOC's recent shift is the latest example of how the dollar's descent is rippling through global financial markets, as policymakers step back from propping up their currencies and anticipate more room to ease to shore up growth. In China's case, the authorities have to walk a fine line as a sharply weaker yuan may spur outflows, while a rapidly strengthening one could hurt exports. 'China's domestic condition is not ready to take on significant yuan appreciation,' said Ju Wang, head of Greater China FX & rates strategy at BNP Paribas SA. 'We still believe the yuan will lag the basket despite the weak USD trend and de-dollarization theme.' Beijing's tariff truce with Washington has bolstered China's currency, helping it advance more than 2% versus the greenback from an 18-year low set in April. The rally has given the PBOC room to pare back its defense of the yuan. The offshore yuan slipped 0.1% to 7.1980 per dollar on Wednesday to head for a third day of declines. This came after the PBOC set the yuan fixing at 7.1894, a slightly weaker rate for a second session. The PBOC has refrained from issuing bills in Hong Kong, and Bloomberg's calculation show that maturities in the three months through May unleashed 85 billion yuan of funds into the market. That helped to keep one-month funding costs on the yuan at around 1.7%, compared with as much as 4.5% in January when the PBOC offered extra bills to squeeze yuan short sellers. The latest economic data reinforce the need for authorities to ensure that the yuan doesn't strengthen too quickly. China's exports have held up well, but persistent price deflation and weak consumption highlight the need for continued policy support. Analysts say Chinese officials are unlikely to sit on the sidelines if the yuan starts to make rapid gains, akin to the recent moves seen in the Taiwan dollar and South Korean won. 'Alongside the resurfacing USD selloff, the PBOC is likely to tread cautiously to avoid excessive yuan appreciation, which could weigh on China exports amid the tariffs rout,' said Ken Cheung, chief Asian FX strategist at Mizuho Bank. This article was generated from an automated news agency feed without modifications to text.
Business Times
19-05-2025
- Business
- Business Times
Hong Kong dollar falls to near one-year low on flush cash conditions
[HONG KONG] The Hong Kong dollar weakened to a near one-year low against the US dollar on Monday (May 19), reversing the strength seen two weeks ago, as falling borrowing costs in the financial hub on the back of flush cash conditions led to a return of carry trades. The loose liquidity conditions come after the city's de-facto central bank forcefully stepped up intervention at the start of this month to defend the currency's peg to move within 7.75 and 7.85 per dollar by purchasing greenbacks while injecting local currency. Such an operation effectively swelled the aggregate balance, a gauge of cash at banks, to a near three-year high of HK$173.64 billion (S$28.8 billion) on Friday, compared with HK$45.1 billion at end-April. The Hong Kong dollar fell to a low of 7.8220 per dollar, the weakest level since May 2024. It last traded at 7.8206 per dollar as of 0603 GMT. 'It is driven by carry,' said Ju Wang, head of Greater China FX & rates strategy at BNP Paribas. A carry trade is a popular strategy of borrowing a low-yielding currency to fund a higher-yielding currency for profit, and the short-end rate differential between Hong Kong dollar and US dollar has widened to yield a near 4 per cent profit from long USD/HKD spot, Wang said. BT in your inbox Start and end each day with the latest news stories and analyses delivered straight to your inbox. Sign Up Sign Up The rapid dial back of the Hong Kong dollar reflects 'the positive carry of USD/HKD due to the collapse of Hong Kong Interbank Offered Rate (hibor), not the loss in confidence in the HKD peg,' Raymond Yeung, chief economist for Greater China at ANZ, said in a note. The overnight hibor, a key barometer of liquidity conditions, has been hovering at three-year lows since the Hong Kong Monetary Authority (HKMA) action. It was fixed at 0.03577 per cent on Monday. 'HKD liquidity situation stays very flush ... as the liquidity injected earlier will stay within the system in the absence of weak-side Convertibility Undertaking triggering,' said Tommy Xie, head of Greater China research at OCBC Bank. Xie also said that a string of recent initial public offerings (IPOs) in the Hong Kong market were smaller than initially expected and left the Hong Kong dollar liquidity on the loose side. However, analysts widely expect the loosening cash conditions in Hong Kong to be temporary. 'The sharp fall in hibor is favourable for Hong Kong's economy, where the property market has been lacklustre. The authorities would withdraw liquidity only if the extreme market positioning threatens financial stability,' ANZ's Yeung said. REUTERS
Business Recorder
13-05-2025
- Business
- Business Recorder
China's yuan jumps to 6-month high, breaches key threshold after Sino-US tariff truce
SHANGHAI: China's yuan jumped to a six-month high against the dollar on Tuesday, breaching a key threshold, after Beijing and Washington agreed to pause their trade war while the central bank also lent support through its official guidance rate. The deal inked between US and Chinese officials after weekend talks in Geneva surpassed market expectations, as both sides agreed to drastically unwind most of the tariffs imposed on each other's goods since early April. The dollar rose broadly on the back of a boost to sentiment as risks of a US recession receded and reduced the need for a near-term rate cut by the Federal Reserve. The economic dividend of a potentially durable trade deal also propelled the Chinese currency past the key 7.2 per dollar level in both onshore and offshore trades to levels last seen in November. 'The substantial progress made in US-China trade talk gave markets more than what it needs to cheer,' analysts at OCBC Bank said in a note. 'This de-escalation does not equate to a full return to normalcy,' they said, noting the trajectory of the bilateral trade tension over the next 90 days and beyond will be dependent on the progress of direct US-China negotiations and how both sides 'engage third-party countries and trade blocs through broader consultations coalition-building.' As of 0211 GMT, the onshore yuan rose to a high of 7.1855 per dollar, the strongest level since November 11, before trading at 7.1902 around midday, 0.24% higher than the previous late night close. Its offshore counterpart followed suit to scale a six-month high of 7.1791 before last changing hands at 7.1839. Prior to market opening, the People's Bank of China (PBOC) lifted its official midpoint fixing to a level firmer than the psychologically important 7.2 per dollar for the first time in more than a month. China's yuan strengthens It set the midpoint rate, around which the yuan is allowed to trade in a 2% band, at 7.1991 per dollar, its strongest since April 7 and 189 pips firmer than a Reuters' estimate. The central bank's midpoint fixing is monitored closely by markets as they are viewed as a signal of official's stance on foreign exchange policy. 'Part of the yuan strength on Tuesday was led by a breach of the key 7.2 per dollar level in the fixing, which was a nod to further rises,' said a trader at a foreign bank. Still, some analysts argued that a too-strong Chinese currency could prompt exporters to settle their dollar deposits and trigger even sharper gains. 'We maintain our view that the PBOC prefers to keep the yuan from appreciating too much against the dollar,' said Ju Wang, head of Greater China FX & rates strategy at BNP Paribas.
Business Recorder
12-05-2025
- Business
- Business Recorder
China's yuan slips against dollar
SHANGHAI: China's yuan slipped against the dollar on Friday, as investors cautiously looked towards key tariff talks with the United States over the weekend for signs of a de-escalation of the trade dispute between the world's two largest economies. Officials from Beijing and Washington prepare to meet in Switzerland on Saturday for negotiations that markets hope could be the first step toward resolving the trade war disrupting the global economy. 'The talk is likely to centre on de-escalation rather than a big trade deal, with Bessent stating that current tariff rates aren't sustainable and are equivalent to a trade embargo,' said Ju Wang, head of Greater China FX & rates strategy at BNP Paribas, referring to US Treasury Secretary Scott Bessent. 'The key question for the market is whether tariffs will eventually be reduced to 50–60% or 20–30%. In our base case, where US tariffs on China are scaled back to 50%, the yuan is likely to remain around the current level.' As of 0330 GMT, the onshore yuan was 0.06% lower at 7.2492 per dollar, while its offshore counterpart was down 0.08% at 7.2492. Prior to the market opening, the People's Bank of China (PBOC) set the midpoint rate, around which the yuan is allowed to trade in a 2% band, at 7.2095 per dollar, its weakest since April 24.
Yahoo
09-05-2025
- Business
- Yahoo
BNP's Ju Wang on 'Dramatic' Movements in Asian FX
"Dramatic" movements in Asian currencies reflect concerns over a long term de-dollarization trend, but a lack of alternative assets outside of US markets can be a challenge for investors. That's according to BNP Paribas Head of Greater China FX and Rates Strategy Ju Wang. She speaks on Bloomberg's The China Show. Sign in to access your portfolio
