USDCNH melts amidst funding pressure

SHANGHAI, June 1 (Reuters) – China’s central bank on Thursday pushed the reference rate for the yuan up by 0.8 percent, the midpoint’s second largest one-day appreciation since the currency was de-pegged from the dollar in 2005, as it wages war on depreciation expectations.

The spot rate followed suit, crossing the 6.8 per dollar level for the first time since Nov. 11 to trade at 6.7923 at 0333 GMT.

The yuan has now been guided about 1.5 percent higher since May 24, when Moody’s Investors Service downgraded China’s sovereign credit rating for the first time since 1989.

In the offshore market, the currency has strengthened against the dollar by about 2 percent over that period.

“The PBOC has let the yuan bulls loose in the China shop,” said Stephen Innes, senior trader at OANDA in Australia, referring to the People’s Bank of China.

“Needless to say, the market is a tad shell-shocked this morning while searching for some policy clarity from the PBOC.”

Daily Mail via Reuters

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Stephen Innes

Stephen Innes

Senior Currency Trader and Analyst at OANDA
Stephen has over 25 years of experience in the financial markets and specializes in Asian currencies at OANDA. After having started his trading career with NatWest Bank, he is currently based in Singapore as a Senior Currency Trader and Analyst with OANDA, focusing on the movement of the Aussie Dollar and ASEAN Currencies. Stephen has an extensive trading experience in Interest Rate Futures, Money Markets and Precious Metals. Prior to joining OANDA, he worked with organizations like Cambridge Mercantile, Nat West, Garvin Guy Butler, Sumitomo Mitsui Banking Corporation. Stephen was born in Glasgow, Scotland, and holds a Degree in Economics from the University of Western Ontario.
Stephen Innes
Stephen Innes

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