The yuan halted a three-day slide after the central bank’s reference rate rose for the first time since China devalued its currency on Tuesday.
The onshore spot rate was little changed at 6.3970 per dollar as of 9:35 a.m. in Shanghai, and has fallen 2.9% this week. The freely traded offshore yuan advanced 0.4%, trimming its weekly loss to 3.6%. The People’s Bank of China’s fixing strengthened 0.05%, after slides of at least 1.1% in each of the last three days.
The yuan tumbled 1.8%, the most in two decades, on the day of the devaluation and declines have since moderated as the PBOC intervened via agent banks and signalled its support for the currency. The monetary authority said Thursday that there’s no basis for depreciation to persist and that it will step in to control large fluctuations.
“The crisis management measures from the PBOC including intervention in the spot market and press conference have clearly set the boundary for the yuan,” Tommy Xie, an economist at Oversea-Chinese Banking Corp. in Singapore, wrote in a note on Friday. “Should the spot prices stabilise in the coming few days, we are probably at the end of this currency market rout.”
China’s first major devaluation since 1994 shocked global investors on Tuesday as the PBOC said it would let the market play a bigger role in determining the yuan’s level. Policy makers are trying to balance the need for financial stability against a desire for stronger exports and reserve-currency status at the International Monetary Fund.
Under a new methodology used to determine the reference rate, market makers who submit contributing prices have to consider the previous day’s close, foreign-exchange demand and supply, as well as changes in major currency rates.
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The onshore spot rate was little changed at 6.3970 per dollar as of 9:35 a.m. in Shanghai, and has fallen 2.9% this week. The freely traded offshore yuan advanced 0.4%, trimming its weekly loss to 3.6%. The People’s Bank of China’s fixing strengthened 0.05%, after slides of at least 1.1% in each of the last three days.
The yuan tumbled 1.8%, the most in two decades, on the day of the devaluation and declines have since moderated as the PBOC intervened via agent banks and signalled its support for the currency. The monetary authority said Thursday that there’s no basis for depreciation to persist and that it will step in to control large fluctuations.
“The crisis management measures from the PBOC including intervention in the spot market and press conference have clearly set the boundary for the yuan,” Tommy Xie, an economist at Oversea-Chinese Banking Corp. in Singapore, wrote in a note on Friday. “Should the spot prices stabilise in the coming few days, we are probably at the end of this currency market rout.”
China’s first major devaluation since 1994 shocked global investors on Tuesday as the PBOC said it would let the market play a bigger role in determining the yuan’s level. Policy makers are trying to balance the need for financial stability against a desire for stronger exports and reserve-currency status at the International Monetary Fund.
Under a new methodology used to determine the reference rate, market makers who submit contributing prices have to consider the previous day’s close, foreign-exchange demand and supply, as well as changes in major currency rates.
Click Here To Register For Free Trial Services OR Give A Missed Call : +6531581402 Follow Us On Twitter : www.twitter.com/epicresearchsg Like Us On Facebook : www.facebook.com/EpicResearchSingapore Need Any Assistance Feel Free To Mail Us at : info@epicresearch.sg
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