China Yuan Ends Steady After Recent Weakness; May Consolidate in Short-term
Shanghai (Nov 4) China's yuan ended steady against the U.S. dollar Monday as banks bought on dips after the Chinese currency weakened for the sixth straight session.
On the over-the-counter market, the dollar ended at CNY6.0992 compared with Friday's close of CNY6.0995. It traded in a range of CNY6.0962 to CNY6.1025.
The yuan may enter a consolidative period following recent losses, as investors are cautious over potential foreign-exchange reforms ahead of meetings of Chinese policymakers that will be held Nov. 9-12.
Before the start of trading, the People's Bank of China set the dollar/yuan central parity rate higher for the sixth consecutive session amid dollar strength overseas. The rate was set at 6.1482 compared with Friday's 6.1452.
"While the dollar may remain strong in the short run, the yuan may not weaken much further against the dollar, as the yuan is still expected to strengthen," said a Beijing-based trader with a local bank.
The yuan may find psychological support at CNY6.10 against the dollar, a Shanghai-based trader with a foreign bank said, adding that exporter demand for the yuan remains high.
The yuan has retreated 0.28% against the dollar since Oct. 24, when it closed at a record high of 6.0820. For the year, the yuan has risen 2.2%.
Offshore, one-year dollar/yuan nondeliverable forward contracts were quoted at 6.1570/6.1650 compared with 6.1595/6.1620 late Friday, implying a 0.9% fall by the yuan over the next year.
In the offshore yuan market in Hong Kong, where the Chinese currency floats freely, the dollar was at CNY6.0880 late Monday compared with CNY6.0879 late Friday.