Yuan weakens on seasonal USD demand

SHANGHAI, Nov 13 (Reuters) – China’s yuan eased against the dollar on Monday, thanks to continuing corporate demand for the greenback and a weaker official fixing. The dollar got a lift against major peers as U.S. yields spiked and the pound stumbled. Prior to Monday’s market opening, the People’s Bank of China lowered its midpoint rate at 6.6347 per dollar, the weakest level in nearly two weeks, 65 pips or 0.1 percent weaker than the previous fix of 6.6282 on Friday. In the spot market, the onshore yuan opened at 6.6510 per dollar and was changing hands at 6.6473 at midday, 62 pips weaker than the late session close on Friday and 0.19 percent softer than the midpoint. Its offshore counterpart was trading 0.14 percent weaker than the onshore spot, at 6.6565 per dollar as of midday. Traders said seasonal demand for the dollar from some oil firms and others impacted the spot yuan rate. Market participants said Beijing’s Friday announcement on raising foreign ownership limits in financial firms did not have a direct impact on spot yuan, but it should boost the Chinese currency and capital inflows in long run. While markets “will tread carefully knowing it will take time for something actionable to occur”, the opening up is “a clear signal that China is looking to increase foreign direct investment (FDI)”, Stephen Innes, OANDA’S head of Asia-Pacific trading, said in a note in Monday.

Daily Mail UK 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