China’s yuan soared against the U.S. dollar on Thursday following a sharp rise in the offshore spot rate as China worked to stem capital flows and stabilize the currency ahead of Donald Trump’s inauguration as U.S. president and the Lunar New Year.
The offshore yuan gained 0.8 percent against the dollar and traded at 6.8151 as of 0830 GMT (3.30 a.m. ET), driven up by a rising cost of funds in Hong Kong and trading firmer than the onshore spot rate for a second straight day.
It was not clear if Chinese authorities had engineered the spike in yuan borrowing rates in Hong Kong. But they had used such a tactic several times last year to support offshore yuan exchange levels and by extension relieving some of the pressure on the yuan onshore, which is at more than eight-year lows.
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