Yuan slides post China GDP

SHANGHAI, Oct 19 (Reuters) – China’s yuan eased against the U.S. dollar on Thursday morning after slightly slower economic growth in the third quarter, while strong corporate demand for the greenback piled additional pressure on the Chinese currency.

China’s economy grew 6.8 percent in July-September period from a year earlier, in line with market expectations and slightly slower than the second quarter. But the outcome was at odds with the central bank governor Zhou Xiaochuan’s more optimistic growth outlook on Sunday, when he said gross domestic product could grow 7 percent in the second half of this year. “With the China GDP coming in on consensus, whatever bullish sentiment the markets were positioned for…after Zhou Xiaochuan’s comment earlier this week that the economy could grow 7 percent in the second half of the year, should get priced out quickly,” Stephen Innes, head of Trading Asia-Pacific at OANDA said in a research note.

Prior to market open, the People’s Bank of China (PBOC) lowered its midpoint for the third straight day to 6.6093 per dollar, below the key psychologically important 6.6 per dollar for the first time since Oct.10.

Thursday’s official guidance rate was 102 pips or 0.15 percent weaker than the previous fix of 6.5991 on Wednesday. Traders said Thursday’s official guidance largely matched their forecasts.

In the spot market, the onshore yuan opened at 6.6290 per dollar, fell to a low of 6.6390 before changing hands at 6.6317 at midday, 46 pips weaker than the previous late session close and 0.34 percent softer than the midpoint.

Its offshore counterpart also followed the trend. As of midday, the offshore yuan was trading 0.05 percent weaker than the onshore spot at 6.6353 per dollar.

Traders said spot yuan fell further on rising corporate demand for the greenback as some companies usually need to purchase dollars for their financing needs in the middle of the month.

 

Nasdaq News via Reuters

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Stephen Innes

Stephen Innes

Head of Trading APAC at OANDA
Stephen has over 25 years of experience in the financial markets and currently based in Singapore as the Head of Trading Asia Pacific with OANDA. Stephen's market views focus on the movement of G-10 and ASEAN Currencies. His views appear in Bloomberg, CNBC.Reuters, New York Times WSJ and the Economist. His media appearances include Bloomberg TV & Radio, BBC International, Sky TV, Channel News Asia, ASTRO AWANI and BFM Malaysia. Stephen has an extensive trading experience in Spot and Forward FX, Currency and Interest Rate Futures, Money Market Derivatives and Precious Metals. Before joining OANDA, he worked with organisations like Nat West, Chemical Bank, Garvin Guy Butler, and 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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