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Mint
4 days ago
- Business
- Mint
Chinas yuan edges lower on dollar strength, weaker fixing
HONG KONG, - China's yuan weakened slightly against the U.S. dollar on Wednesday, as the central bank eased its fixing and the greenback held on to gains spurred by easing trade tensions and upbeat data. Prior to the market's opening, the People's Bank of China set the midpoint rate at 7.1894 per dollar, 18 pips weaker than the previous level. The midpoint rate is the level around which the yuan is allowed to trade a maximum of 2% up or down. That comes after the central bank set a slightly weaker-than-expected midpoint fixing for two days in a row, which is seen by market players as a sign to slow the currency's appreciation. The yuan is up 1.0% against the dollar this month following a de-escalation in China-U.S. trade tensions, while the greenback weakened on concerns over the U.S. fiscal outlook. The move indicates that the PBoC is phasing out its one-way CNY fixing support, said Ken Cheung, chief Asian FX strategist at Mizuho Bank. "Notably, CNH/CNY spot spread has turned negative since May 23, reflecting a modest RMB appreciation bias is building up," he added. By 03:22 GMT, the yuan was 0.04% lower at 7.1985 to the dollar after trading in a range of 7.1910 to 7.2033. The offshore yuan traded at 7.1961 per dollar, down about 0.06% in Asian trade. Based on Wednesday's official guidance, the yuan is allowed to drop as far as 7.3332. Elsewhere, the Hong Kong dollar weakened past 7.84 per dollar for the first time since September 2023. The dollar's six-currency index was 0.3% higher at 99.79, building on Tuesday's rally, as upbeat economic data in the United States and easing trade frictions lifted sentiment. Key onshore vs offshore levels: * Overnight dollar/yuan swap onshore -6.00 pips vs. offshore -6.00 * Three-month SHIBOR 1.6 % vs. 3-month CNH HIBOR 1.7 % This article was generated from an automated news agency feed without modifications to text.
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.
Wall Street Journal
06-05-2025
- Business
- Wall Street Journal
HKMA Sells Hong Kong Dollars as Currency Approaches Peg to Greenback
The Hong Kong Monetary Authority sold a total of US$15.05 billion worth of Hong Kong dollars so far this year. Photo: tyrone siu/Reuters The Hong Kong Monetary Authority has sold over a 100 billion in Hong Kong dollars in the foreign-exchange market this month, as the Hong Kong currency's strength threatens its peg to the U.S. dollar. The Hong Kong dollar's rally to HK$7.75 triggered intervention from the HKMA to sell Hong Kong dollars to defend the currency's peg to the greenback, Mizuho Securities Asia's Ken Cheung said in an email.
Business Times
22-04-2025
- Business
- Business Times
Offshore renminbi funding costs in Hong Kong sink to record low
[HONG KONG] The cost to borrow the offshore renminbi in Hong Kong dropped to the lowest since data became available in 2013, putting pressure on the Chinese currency even as the US dollar weakens. The one-month Hong Kong interbank offered rate for the renminbi – known as Hibor – dropped 11 basis points to 1.46 per cent, according to official data. The record low rate is basically a sign of how easy it is for traders to source the Chinese currency in the city and allows them bet on further renminbi weakness. It comes amid expectations Beijing will keep liquidity ample to boost its economy and allow a managed renminbi depreciation to offset the impact of US tariffs. The offshore renminbi slipped as much as 0.3 per cent on Tuesday (Apr 22) to around 7.31 per US dollar. It has recovered around 2 per cent from a record low hit this month. Weakness in the greenback has lessened the need for the People's Bank of China to step in to steady the renminbi. Like many global peers, the currency has benefited from a global exodus from US assets that has weighed on the US dollar. 'The offshore renminbi's borrowing costs declined as the US dollar is too weak and there is no need for PBOC intervention to support the renminbi,' said Ju Wang, head of greater China FX & rates strategy at BNP Paribas. 'A loose funding situation offshore is also helpful for China to keep a weak renminbi to counter tariff risks, rather than a strong one.' 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 Recent inflows from the mainland into Hong Kong's stock market have also helped to replenish the offshore renminbi's liquidity and pushed Hibor lower, according to Ken Cheung, chief Asia FX strategist at Mizuho Bank. Mainland investors purchased a net HK$14.1 billion (S$2.4 billion) of these shares on Tuesday, set for the biggest daily amount in almost two weeks. They rushed to the offshore market this month to snap up tech shares and also due to some Hong Kong stocks' cheaper pricing compared with onshore peers. The PBOC is seen allowing the renminbi to depreciate amid escalating trade tensions with the US. The Chinese central bank guided the currency lower by cutting its daily reference rate beyond a closely watched level this month, stoking bets Beijing may weaken the renminbi even further to counter some impacts of the tariffs. 'Cheap offshore renminbi funding cost corresponds with PBOC's recent onshore fixing guidance for moderate renminbi weakness,' said Fiona Lim, a senior foreign-exchange strategist at Malayan Banking. 'Drivers such as economic pressure at home, trade conflicts and broader US dollar weakness act as counterbalancing factors to keep renminbi somewhat stable.' BLOOMBERG
Yahoo
13-03-2025
- Business
- Yahoo
Foreigners Snapping Up China's Bank Debt May Boost Yuan Defense
(Bloomberg) -- China's bond selloff is creating pockets of opportunity for foreign investors, who can swap dollars for more attractive yuan-denominated short-term bank debt — and inadvertently bolster Beijing's support of its currency. Trump DEI Purge Hits Affordable Housing Groups NYC Congestion Pricing Toll Gains Support Among City Residents Electric Construction Equipment Promises a Quiet Revolution Open Philanthropy Launches $120 Million Fund To Support YIMBY Reforms Prospect Medical's Pennsylvania Hospitals at Risk of Closure The yield on one-year AAA-rated negotiable certificates of deposits, short-term debt issued by banks, rose to 2.03% this week, the highest since June, according to data compiled by Bloomberg. That's luring buying from global investors, according to traders. The premium between the FX-hedged one-year NCDs and a US bill of the same tenor jumped to the highest this year in March, also an indication of the former's increased attractiveness. Higher foreign inflows may help the People's Bank of China curb volatility in the yuan at a time when the prospect of escalating trade tensions between the US and China have roiled market sentiment. Foreigners held outstanding 1.07 trillion yuan ($148 billion) of Chinese NCDs as of the end of January, the highest since September, according to Bloomberg data. Increased global purchases of NCDs led to higher foreign-exchange hedging demand in the onshore market, helping push up the one-year swap rate to the highest since October this month. The flows 'perhaps amplified the CNY FX swap movement,' said Ken Cheung, chief Asia FX strategist at Mizuho Bank Ltd. 'It may not be a direct support to defend the CNY, but could facilitate Chinese banks to swap USD funding to defend CNY spot if necessary.' Appealing NCDs 'With NCD rates mostly back up to around 2% level, while implied yuan rates are anchored, some foreign investors may see it as appealing to re-enter the market with small positions,' said Frances Cheung，head of FX and rates strategy at Oversea-Chinese Banking Corp. The yields on NCDs have risen since January, as the PBOC restrained liquidity offerings to the financial system in efforts to reduce yuan supply and support the currency. Higher supply of NCDs also drove yields higher. How America Got Hooked on H Mart How Trump's 'No Tax on Tips' Could Backfire for the Working Class How Natural Gas Became America's Most Important Export Germany Is Suffering an Identity Crisis 80 Years in the Making Disney's Parks Chief Sees Fortnite as Key to Its Future ©2025 Bloomberg L.P. Sign in to access your portfolio
