Yuan dips but steady fixing ahead of China Congress limits losses
SHANGHAI — China’s yuan weakened on
Friday after surging U.S. inflation data pointed to further
dollar strength, although losses were capped by Beijing’s
efforts to steady the Chinese currency ahead of the Communist
Party Congress opening on Sunday.
The onshore yuan was changing hands at 7.1735 at
midday, slightly weaker than the previous late session close.
The currency fell more than 0.6% in late session trading on
Thursday to a two-week low of 7.2251, after data showed U.S.
core inflation jumped the most in 40 years in September,
strengthening the case for further hefty rate hikes that will
bolster the dollar.
On Friday, the People’s Bank of China set the midpoint rate
at 7.1088 per dollar prior to market open, a level
that barely changed this week. The steady fixing helps anchor
the yuan ahead of Party Congress, analysts say.
President Xi Jinping will take the stage on Sunday to kick
off the historic congress, where he is poised to win a third
term that would solidify his place as China’s most powerful
ruler since Mao Zedong.
All eyes will be on his opening speech and various
leadership reshuffles, but analysts say the congress is unlikely
to trigger any immediate or dramatic changes in policy to revive
the sputtering economy.
“Xi Jinping’s election is all but certain,” wrote Ales
Koutny, emerging markets portfolio manager at Janus Henderson
“The main consideration for markets will be once the Party
Congress is out of the way, if China will renew its crackdown on
tech, property and other relevant industries,” Koutny said,
adding China’s stock and currency market weakness reflects
Data released on Friday showed that China’s consumer prices
in September rose at the fastest pace since April 2020, while
China’s central bank chief promised stronger support for the
However, Zichun Huang, an economist at Capital Economics,
said the weak yuan is limiting the PBOC’s options for
stimulating the economy.
“The main constraint at the moment is the renminbi, which is
close to its weakest level in over a decade,” Huang wrote. “We
don’t expect policy rate cuts until pressure on the currency
The yuan market at 4:54AM GMT:
Item Current Previous Change
Spot change YTD
Spot change since 2005
Item Current Previous Change
*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
non-deliverable 7.029 1.14%
*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 Shanghai newsroom; Editing by Kim Coghill)
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