SHANGHAI — China’s yuan inched higher on
Thursday, shrugging off a broadly stronger U.S. dollar, as
investors hoped upcoming data would show a further recovery in
the Chinese economy after a sharp COVID-induced slump in the
Official and private business surveys had pointed to
improving conditions in June as lockdowns were lifted in
Shanghai and some other larger cities, but some areas have
recently reported flare-ups in COVID-19 cases again, which could
slow or even stymie a recovery.
“Markets are awaiting the release of June economic
indicators,” said Ken Cheung, chief Asian FX strategist at
Mizuho Bank, noting Shanghai’s reopening in June after two
months of lockdown should help boost the economy.
“It’s hard to gauge if the rebound is sustainable,” Cheung
China is set to release June FX reserves data later in the
session, with inflation figures due on Saturday. Next week,
credit and trade data will be released, with activity indicators
and second-quarter GDP on July 15.
Prior to the market opening, the People’s Bank of China
(PBOC) set the midpoint rate at 6.7143 per dollar,
firmer than the previous fix 6.7246.
In the spot market, the onshore yuan opened at
6.7098 per dollar and was changing hands at 6.7011 at midday, 57
pips firmer than the previous late session close.
Foreign investors continued to cut holdings in Chinese bonds
in June but added positions in equities, bucking the trend in
other emerging markets, the Institute of International Finance
(IIF) said on Wednesday.
Wee Khoon Chong, senior market strategist for APAC at BNY
Mellon Markets, said the foreign equity inflows in June
suggested that easing of COVID-related restrictions fostered
rebounds in credit and investment growth.
“This, in our view, suggests an encouraging return of
foreign investors after a directionless first five months of
2022,” he said.
In global markets, the dollar index continued to
hover at a 20-year high against a basket of major currencies,
driven up by global recession worries and safe haven bid for the
A deteriorating inflation situation and concern about lost
faith in the Federal Reserve’s power to make it better prompted
U.S. central bank officials to rally around an outsized interest
rate increase and a firm restatement of their intent to get
prices under control, minutes of the June 14-15 policy meeting
By midday, the global dollar index traded at 106.867,
while the offshore yuan was trading at 6.7015 per
The yuan market at 0454 GMT:
Item Current Previous Change
PBOC midpoint 6.7143 6.7246 0.15%
Spot yuan 6.7011 6.7068 0.09%
Divergence from -0.20%
Spot change YTD -5.16%
Spot change since 2005 23.51%
Item Current Previous Change
Thomson 103.46 103.38 0.1
Dollar index 106.894 107.096 -0.2
*Divergence of the dollar/yuan exchange rate. Negative number
indicates that spot yuan is trading stronger than the midpoint.
The People’s Bank of China (PBOC) allows the exchange rate to
rise or fall 2 percent from official midpoint rate it sets each
OFFSHORE CNH MARKET
Instrument Current Difference
Offshore spot yuan 6.7012 0.00%
Offshore 6.684 0.45%
*Premium for offshore spot over onshore
**Figure reflects difference from PBOC’s official midpoint,
since non-deliverable forwards are settled against the midpoint.
(Reporting by Winni Zhou and Brenda Goh; Editing by Kim