Yuan advances on dollar to hit its strongest in 16 months

Source:Reuters-Global Times Published: 2017/9/4 18:03:39

China's yuan advanced further against the dollar on Monday to the strongest level in 16 months thanks to beefed-up central bank fixing and heavier corporate dollar sales.

The Chinese currency has strengthened against the greenback over the past few months, with the onshore spot rate rising 2.1 percent to book its best month on record in August - a rare run for a currency that usually trades in a wafer-thin range.

Prior to market opening on Monday, the People's Bank of China raised its official yuan midpoint to 6.5668 per dollar, the sixth straight gaining session and the strongest level since June 23, 2016.

The higher fix follows gains in the spot yuan rate on Friday, traders said, adding Monday's guidance largely matched their forecasts. Monday's midpoint was 0.37 percent firmer than the previous fix of 6.5909 on Friday.

In the spot market, the yuan opened at 6.5555 per dollar and closed at 6.5200, the strongest level since May 12, 2016. The spot yuan was changing hands at 6.5489 at midday, 0.27 percent stronger than the midpoint.

A trader at an Asian bank in Shanghai said the onshore yuan trade continued "following the flow", meaning corporate dollar selling in morning trade was heavy enough to push the yuan higher.

Some market participants said they were concerned about short-term dollar volatility amid heightened tensions on the Korean Peninsula.

The Chinese currency gained around 1.4 percent against the US dollar throughout last week, the best weekly performance since July 2015.

However, the yuan only rose 0.7 percent on a trade-weighted basis against a basket of currencies of its trading partners, according to China Foreign Exchange Trade System.


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