SHANGHAI, Dec 17 (Reuters) - The Chinese yuan weakened slightly against the dollar on Friday, and was on track to end the week little changed, after Beijing took steps to rein in appreciation expectations.
Meanwhile, a busy week for major central banks heralded the beginning of the end pandemic-era stimulus and threatens to put downward pressure on the Chinese currency.
The yuan was changing hands at 6.3699 per dollar at midday, 9 pips weaker from the previous late session close, after the People's Bank of China (PBOC) set a slightly lower midpoint.
China has taken several measures over the past weeks to tame the yuan's rapid rise, which last week took the currency to the highest level against the greenback in 3-1/2 years.
The central bank had announced a hike in the foreign exchange reserve requirement ratio, which took effect this week. And on Wednesday, regulators granted fresh quotas worth $3.5 billion under a key outbound investment scheme.
In addition, the PBOC in November recorded its biggest net purchase of foreign exchange in more than six years, a move that could help stem yuan's rise.
Traders expect volatility to be low in yuan trading throughout the rest of the year.
In his latest comment, Guan Tao, global chief economist at BOC International and a former foreign exchange regulator, said the yuan faces a lot of uncertainties next year, with export performance largely dependent on the pandemic and other countries' economic conditions.
The Bank of Japan kept monetary policy ultra-loose on Friday but dialed back some emergency pandemic-funding, less than 48 hours after the U.S. Federal Reserve signaled an imminent end to stimulus as policymakers respond to soaring global inflation.
And on Thursday, Britain became the first G7 economy to hike interest rates since the onset of the pandemic. The European Central Bank also took another small step in rolling back crisis-era stimulus.
The yuan market at 4:46AM GMT:
ONSHORE SPOT:
|
Item |
Current |
Previous |
Change |
|
PBOC midpoint |
6.3651 |
6.3637 |
-0.02% |
|
Spot yuan |
6.3699 |
6.369 |
-0.01% |
|
Divergence from midpoint* |
0.08% |
||
|
Spot change YTD |
2.49% |
||
|
Spot change since 2005 revaluation |
29.93% |
Key indexes:
|
Item |
Current |
Previous |
Change |
|
Thomson Reuters/HKEX CNH index |
102.01 |
102.19 |
-0.2 |
|
Dollar index |
95.972 |
95.977 |
0.0 |
*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% from official midpoint rate it sets each morning.
OFFSHORE CNH MARKET
|
Instrument |
Current |
Difference from onshore |
|
Offshore spot yuan * |
6.3776 |
-0.12% |
|
Offshore non-deliverable forwards ** |
6.5441 |
-2.74% |
*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 Sam Holmes
Source: Reuters