Latest news with #CFETS
Bloomberg
15-06-2025
- Business
- Bloomberg
Yuan May Extend Drop Versus Peers as Beijing Seeks Exports Boost
China's desire to boost exports at a time of global trade turmoil means the yuan now looks set to weaken against most major currencies. One possible exception: the dollar. The yuan may fall as much as 3% in the short term versus an official currency basket, according to Oversea-Chinese Banking Corp., while TD Securities sees a drop nearer to 4%. The basket, tracked by the CFETS RMB Index, measures the yuan's performance against the currencies of 25 major trading partners, including the dollar. It slipped to the lowest level since 2020 this month.
Business Recorder
13-06-2025
- Business
- Business Recorder
China's yuan slips as Middle East tensions rise
SHANGHAI: China's yuan eased against the US dollar on Friday, retreating from a more than two-week high reached overnight, as the greenback rebounded after Israel launched strikes on Iran. Escalating tensions in the Middle East dented global risk appetite, prompting investors to flock to safe-haven assets such as gold and the US dollar. The spot yuan opened at 7.1799 per dollar and was last trading at 7.1767 as of 0253 GMT, 52 pips lower than the previous late session close. Still, traders and analysts said broad weakness in the dollar continues to lend support to the yuan. Yuan slips as investors wait on outcome of US-China trade talks Prior to the market opening, the People's Bank of China set the midpoint rate at 7.1772 per dollar, its strongest since March 28 and 87 pips weaker than a Reuters' estimate. The spot yuan is allowed to trade 2% on either side of the fixed midpoint each day. The official midpoint has been set in line with market estimates possibly due to the fact that the US dollar has been trading sideways and there is less need for policy guidance at this point, Maybank analysts said in a note. The onshore yuan firmed in the late night session on Thursday, hitting its strongest since May 26, as the dollar index fell to its lowest in over three years on weaker-than-expected US inflation data. 'On a trade-weighted basis, the yuan has been underperforming, allowing Chinese exports to maintain relative price competitiveness,' they said, adding that the current level marks a sweet spot for trade negotiations with the US China's trade-weighted CFETS yuan basket index fell to 95.49, the lowest since July 2023, according to Reuters estimates. The offshore yuan has firmed towards 7.17 amid broader US dollar weakness and an improved outlook after the US and China reached agreement on a trade framework, said Chang Wei Liang, currency and credit strategist at DBS. A private property developer launched a US dollar bond sale for the first time since 2023, a sign that stress in China's real estate financing sector may be easing, he said. An index that measures the dollar against six other currencies rose 0.45% and was last at 98.12. The offshore yuan traded at 7.1794 yuan per dollar, down about 0.09% in Asian trade.
New Straits Times
06-06-2025
- Business
- New Straits Times
China yuan's trade-weighted value falls to near two-year low
SHANGHAI: The Chinese yuan's value against its major trading partners fell close to a two-year low on Friday, reflecting the central bank's efforts to keep it steady versus the US dollar even as other currencies rise sharply. WHY IT'S IMPORTANT The People's Bank of China (PBOC) has been carefully managing its currency, allowing only marginal appreciation against the dollar even as other major and Asian currencies rally against a weakening US currency. The policy, done through keeping the daily official yuan midpoint guidance steady, is expected to protect exporters during an ongoing trade war by offsetting tariffs with better currency conversion rates for their revenues. A steadier yuan will also ensure there is no chaotic rush by corporates and households to sell their nearly US$1 trillion in foreign exchange deposits. While Beijing has said it does not deliberately seek a weaker currency, the currency's passive decline comes at a time of heightened Sino-US tensions for an economy struggling with deflationary pressures and weak domestic demand. BY THE NUMBERS The CFETS yuan index, a gauge that measures the yuan's weighted value versus 25 currencies of trading partners, fell to 95.58 and is down 5.8 per cent year-to-date, according to Reuters calculations based on official data. The yuan has, however, strengthened 1.6 per cent versus the dollar during the same period. The official yuan midpoint has barely changed and is up about 0.05 per cent this year. KEY QUOTES Goldman Sachs estimated that a 10 per cent yuan depreciation in trade-weighted terms could increase goods exports by 5 per cent with a one-quarter lag, equivalent to a an increase of 75-basis-point GDP growth impulse. "A greater than 5 per cent decline in CFETS within five months may be too fast and a further dip below 95 could fuel concerns or even some hostility from other Asian trading partners," Barclays analysts said in a note.
Business Recorder
03-06-2025
- Business
- Business Recorder
China's yuan slips as caution prevails ahead of Trump-Xi talks
SHANGHAI: China's yuan weakened against the dollar on Tuesday, the first trading session after the holiday, as investors cautiously awaited fresh developments in the Sino-U.S. relations following some signs of a re-escalation of tensions. U.S. President Donald Trump and Chinese leader Xi Jinping will likely speak this week, the White House said on Monday, and market participants will be closely monitoring the outcome after Trump accused China of violating an agreement to roll back tariffs and trade restrictions. 'The yuan is likely to swing in a thin range before the talk as heightened trade tensions should hurt both of the world's two largest economies,' said a trader at a Chinese bank. As of 0351 GMT, the onshore yuan was 0.02% lower at 7.1974 per dollar, while its offshore counterpart traded at 7.1994. Prior to the market open, the People's Bank of China (PBOC) set the midpoint rate at 7.1869 per dollar, and 3 pips firmer than a Reuters' estimate of 7.1872. The spot yuan is allowed to trade 2% either side of the fixed midpoint each day. China's yuan looks set for monthly rise Recent broad dollar weakness has allowed the central bank to gradually close the gap between its official guidance and market projections. The PBOC had set persistently firmer-than-expected midpoint settings since November to keep the yuan stable and prevent excess weakness. However, FX analysts at Barclays said the PBOC was in 'a difficult situation now.' 'On the one hand, daily USD/CNY fixings suggest no intention to drive the exchange rate significantly below 7.20, likely on the back of concerns of potential large repatriation flows from exporters,' they said in a note. 'On the other hand, a greater than 5% decline in CFETS within five months may be too fast and a further dip below 95 could fuel concerns or even some hostility from other Asian trading partners.' Based on Tuesday's midpoint fixing, the yuan's value against its major trading partners, as measured by CFETS index, eased to 95.79, and down 5.6% year-to-date, according to Reuters calculations based on official data. The onshore yuan has gained about 1.4% to the dollar during the same period. Traders and analysts noted seasonal foreign exchange demand would kick in to pressure the yuan soon. Overseas-listed Chinese companies usually have higher foreign exchange needs to make dividend payments to their shareholders between May and August. Separately, markets were little swayed by manufacturing activity data, which contracted last month, based on both official and private surveys. On the macro front, investors will switch their attention to trade data due on June 9, seeking more clues from export figures and getting a clearer picture of the health of the economy. The Hong Kong dollar eased to 7.8450 per U.S. dollar on Tuesday, a level not seen since September 2023 and not too far from testing the weaker end of its trading band. The Hong Kong dollar's weakness reflected loose cash conditions, with overnight HKD Hong Kong Interbank Offered Rate (HIBOR), a key barometer of liquidity conditions, hitting record lows. It was last fixed at 0.02027% on Tuesday.
Business Recorder
28-04-2025
- Business
- Business Recorder
Yuan slips as investors await Sino-US trade developments, China PMI
SHANGHAI: China's yuan slipped against the dollar on Monday, as investors carefully monitored the greenback's movements in global markets and developments in trade tensions between the world's two largest economies. Currency traders said they will also pay attention to China's April manufacturing data due on Wednesday for signs of any impact on the economy from US President Donald Trump's 145% tariffs on Chinese goods. While Trump has claimed progress is being made on trade with China, and many other countries, actual evidence is lacking. Treasury Secretary Scott Bessent failed on Sunday to back Trump's assertion that tariff talks with China were under way. 'We think China will leave the door open for negotiations, but won't be in a rush to reach a deal with the US,' economists at Barclays said in a note. As of 0326 GMT, the onshore yuan was 0.13% lower at 7.2960 per dollar, while its offshore counterpart was down about 0.09% in Asian trade at 7.2948. Prior to the market opening, the People's Bank of China (PBOC) set the midpoint rate, around which the yuan is allowed to trade in a 2% band, at 7.2043 per dollar, its strongest since April 8 and 785 pips firmer than a Reuters' estimate of 7.2828. This month, the PBOC slightly eased its control on the currency, allowing official guidance to weaken past the key threshold of 7.2. However, the guidance came in stronger than market forecasts, which traders interpreted as an official attempt to keep the yuan steady while allowing some flexibility to counteract tariff shocks. Underlining the external risks, however, the yuan's value against its major trading partners, as measured by the CFETS yuan basket index, fell about 5% so far this year to 96.42, according to Reuters calculations based on official data. China's yuan slips Meanwhile, the yuan traded largely flat against the dollar year-to-date. 'We maintain our year-end USD/CNY forecast of 7.35, which … implies a yuan depreciation against the CFETS basket and should be supportive of China's exports and growth on the margin,' said Lisheng Wang, China economist at Goldman Sachs. China's deputy central bank governor, Zou Lan, re-affirmed on Monday the continuation of a moderately loose monetary policy and increased support for the economy, while maintaining yuan stability. In global markets, the dollar made a steady start on Monday as investors prepared for a week packed with economic data that may give a first glimpse of whether Trump's trade war is hitting home.
