Yuan firms as U.S., China leaders’ dialogue eases economic concerns

Georgina Lee HONG KONG, Nov 15 (Reuters) – China’s yuan strengthened on Tuesday as investors cheered easing tensions in strained U.S.-China relations following a meeting between the leaders of the world’s two biggest economies on the sidelines of the G20 summit. . It also helped quell broader concerns about China’s stuttering economy, highlighted by fresh data earlier in the day, and helped the yuan extend its gains against the economy for a fourth day. The People’s Bank of China set the average rate at 7.0421 per dollar before the market open, firmer than the previous 7.0899. The spot market opened at 7.0400 per dollar and traded hands at 7.0506 at midday, 204 points firmer than the previous late session close and 0.12% softer from the midpoint. Currently, the spot rate is allowed to trade 2 percent above or below the official fix on any given day. “The meeting between Chinese President Xi Jinping and US President Joe Biden at the G20 summit has cooled Cold War fears,” DBS senior FX strategist Philip Wee and senior economist Radhika Rao wrote in a note. On the sidelines of the G20 summit in Bali, Indonesia, Xi and Biden pledged to communicate more often and agreed that US Secretary of State Anthony Blinken would travel to Beijing for further talks. China and the US have clashed over various issues related to trade, technology and Taiwan, which Beijing claims as its territory. “Reopening communication channels should be seen as a positive outcome of the meeting,” Maybank analyst Saktiandi Supaat said. But back home, a series of weak Chinese data released earlier, including factory output, retail sales and real estate investment, highlighted the challenges for policymakers. The gloomy data capped gains for the onshore yuan, which rose to a near two-month high against the dollar on Monday, boosted by Beijing’s move to support the property sector and ease some of the country’s strict COVID-19 restrictions. “Weaker October data from China poured cold water on bullish sentiment driven by COVID and equity policy twists,” said Ken Cheung, chief Asia FX strategist at Mizuho Bank. The offshore yuan was up 0.02 percent from the open at 7.049 per dollar. Offshore one-year non-deliverable futures (NDF), considered the best available proxy to gauge future market expectations for the value of the yuan, were at 6.877, up 2.40 percent. from the midpoint. The one-year NDF is settled at the midpoint and not at the spot rate. The global dollar index rose to 106.975 from a previous close of 106.66. Yuan Market 4:37 GMT: ONSHORE SPOT: Commodity Current Previous Change PBOC Midpoint 0.68% 7.0421 7.0899 Yuan Spot 7.071 0.29% 7.0506 Difference from midpoint. The key. Item Current Previous Change Thomson Reuters/HKEX 0.0 CNH Index Dollar Index 107.017 0.3 106.66 *Difference between dollar and yuan exchange rate. A negative number indicates that the yuan is stronger than the midpoint. The People’s Bank of China (PBOC) allows the exchange rate to rise or fall by 2 percent from the official mid-rate it sets each morning. OFFSHORE CNH MARKET instrument Current spread over offshore spot yuan * 7.049 0.02% Offshore non-deliverable 6.877 2.40% forwards ** *Premium offshore spot compared to onshore **Figure reflects spread from PBOC as official forwards mid dot. . (Reporting by Georgina Lee Editing by Shri Navaratnam)

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