China’s yuan climbs to 16-month high as PBC raises official fix for 9th straight day

Source:Reuters-Global Times Published: 2017/9/7 17:53:39

China's yuan extended its blistering rally against the faltering US dollar and hit a 16-month high on Thursday after the central bank raised its official guidance rate for the ninth straight session.

The onshore yuan breached the 6.5 level, changing hands at 6.4925 per dollar during the afternoon trading, 0.45 percent firmer than the previous close. The offshore yuan strengthened at around 6.5030.

The Chinese currency has strengthened more than 2,000 pips since the beginning of August, taking its gain to 6.5 percent so far this year, but its upward momentum has appeared to slow slightly this week, traders said.

That has fueled market speculation over how much more authorities will allow the yuan to appreciate, even if the dollar remains weak.   

Prior to the market opening on Thursday, the People's Bank of China, China's central bank, lifted its official yuan midpoint for the ninth trading day in a row to 6.5269 per dollar, the strongest since May 18, 2016.

The midpoint has now seen its longest string of firmer settings since late December 2010.

But Thursday's midpoint - 42 pips or 0.06 percent firmer than the previous fix of 6.5311 per dollar - was slightly weaker than market expectations, traders said.

"There was both corporate dollar buying and selling in the market today, unlike the one-way dollar sales earlier," said a trader at a Chinese bank in Shanghai, adding that companies which had disposed off  massive amounts of long dollar positions were taking a breather.

Though the Chinese currency has stabilized in recent months and is close to recouping all of its 2016 losses, economists believe tight controls on outflows would likely be kept in place for the foreseeable future.

The global dollar index fell to 92.04 from the previous close of 92.29.

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