The reference rate for the yuan was set by Bloomberg -- China, with the strongest bias on record.
The People's Bank of China set the fix at 6.9116 per dollar, 598 pips stronger than the average estimate in a Bloomberg survey of analysts and traders. The strong bias was higher than the previous record of 454 pips seen last Wednesday and was due to a reduction in foreign-currency reserve requirements for banks, which was also aimed at supporting the currency.
The central bank has weakened its yuan once more towards 7, its lowest since 2020, despite the fact that it has fallen to 7, its lowest since 2020. That was because of the US inflation data that fueled bets on jumbo hikes by the Federal ReserveFederal Reserve, which would set China monetary policy further apart from the US and drive outflows.
Eddie Cheung, a senior emerging markets strategist at Credit Agricole CIB said there appears to be more of a near term bias to continue to use the fixing to anchor spot. He said that the policy intention is to ensure market stability, but he said that this may still not be enough to turn around the dollar-yuan.
The renewed dollar strength stemming from the hawkish Fed bets dragged other Asian currencies, like the South Korean won and the yen lower, while also prompting further verbal intervention from Japan.
The yuan is under pressure as Covid-led lockdowns in major cities and turmoil in the nation s property sector weigh on the economy. After an unexpected rate cut in August, traders are watching if the central bank will add liquidity to the banking system this week, as medium-term loans come due.
China's Securities Journal reported that there was no basis for long-term yuan depreciation as China s economy stabilizes, the trade surplus stays high and authorities guide expectations.
The onshore currency was barely changed at 6.9712 per dollar, while the offshore unit went up 0.1% to 6.9783 as of 9: 42 am in Hong Kong.
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