Chinese Yuan Broadly Stable, Investors Expect Measures in Foreign Trade and FX

SHANGHAI, Dec. 24 (Reuters) – The Chinese yuan was little changed against the dollar in limited trading on Friday, as many overseas markets entered the Christmas holidays and a long extended weekend.

Before the market opened, the People’s Bank of China (PBOC) pegged the median rate at 6.3692 per dollar, 41 pips lower than the previous patch of 6.3651. This was 31 pips below Reuters’ estimate of 6.3661.

In the spot market, the onshore Yuan opened at 6.3730 to the dollar and changed hands at 6.3700 by noon, 5 pips lower than the previous end of session close.

The spot yuan hovered in a range of around 30 pips on Friday morning, as trade volume declined to $ 10.6 billion from normal half-day volume of around $ 15 billion. .

Several market participants said trading was slow as many of their peers have already gone on year-end vacations, while overseas markets also lacked clear guidelines.

Although the yuan is on track for a marginal weekly gain against the dollar, a trader at a Chinese bank said markets anticipate currency policy adjustments in the new year, especially after the Premier Li Keqiang’s comments on growing uncertainties in China’s foreign trade. Read more

The latest State Council meeting also reiterated that the yuan exchange rate will remain fundamentally stable and that banks are encouraged to enter into futures market agreements to help exporters cope better with currency fluctuation risks.

“We expect China to implement proactive fiscal policy and prudent monetary policy with a loosening bias next year, while keeping the yuan exchange rate virtually stable at a reasonable and balanced level to revive and supporting economic growth, “said Gao Qi, currency strategist at Scotiabank. .

It maintains its short USD / CNH spot position, with a target of 6.30 per dollar and a trailing stop of 6.42.

As of noon, the broad dollar index fell to 96.044 from the previous close of 96.104, while the offshore yuan traded at 6.3757 per dollar.

The yuan market at 0402 GMT:

PLACE ON LAND:

Key indexes:

* Divergence in dollar / yuan exchange rate. A negative number indicates that the spot yuan is trading stronger than the midpoint. The People’s Bank of China (PBOC) allows the exchange rate to rise or fall 2% from the official median rate it sets each morning.

CNH OFFSHORE MARKET

* Premium for the offshore spot on onshore

** Figure reflects the difference from the official PBOC midpoint, as undeliverable futures are settled relative to the midpoint. .

Reporting by Winni Zhou and Andrew Galbraith

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