Yuan firms despite lower reference rate
Print Edition
THE yuan firmed against the US dollar yesterday despite the Chinese central bank setting the reference rate at a two-month low against a rising greenback.
The Chinese currency closed at 6.1154 on the spot market in Shanghai yesterday, rebounding 0.05 percent from a two-week low on Monday.
The yuan gained despite the People’s Bank of China cutting the currency’s central parity rate by 0.03 percent to 6.1543 per US dollar, the weakest level since September 5.
The yuan can trade within 2 percent on each side of the reference rate.
A US dollar index compiled by Bloomberg News rose 2.3 percent in the four days through yesterday amid improving US economic data.
A trader, who declined to be identified, attributed the yuan’s strengthening in the spot market to stronger demand for the currency usually seen in the fourth quarter.
But Societe Generale economists said in a Monday note that the yuan could weaken against the US dollar in the next six months as the outlook for the Chinese economy is uncertain and the PBOC seeks to quash hopes for a yuan appreciation.
The Purchasing Managers’ Index for manufacturing and services grew slower in China. The official manufacturing PMI was 50.8 for October, below the 51.2 median estimate in a Bloomberg News survey, and 51.1 for September. The services gauge stood at 53.8 last month versus September’s 54.
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