PBOC Sets Yuan Rate at 7.0326

China’s central bank set the official midpoint reference rate for the yuan at 7.0326 per dollar on Tuesday, stronger than what analysts were expecting, but weaker than the previous session.

It was the fourth consecutive session where the People’s Bank of China fixed the midpoint at a level weaker than the psychologically important 7-yuan-per-dollar mark.

Analysts were predicting the midpoint to be set at 7.0421 per dollar after the yuan last traded at 7.0578 in Monday’s session, according to Reuters estimates.

The yuan has become a focal point among investors because of the ongoing trade war between the United States and China, which escalated earlier this month when President Donald Trump said the U.S. is putting 10% tariffs on another $300 billion worth of Chinese goods starting Sept. 1.

The PBOC lets the spot rate trade with a range of 2% above or below the day’s official midpoint fix and this is known as the onshore yuan. The less restrictive exchange rate used outside mainland China is known as the offshore yuan. Investors usually look at the difference between the onshore and offshore exchange rates to determine if the Chinese central bank is willfully manipulating the yuan.

via CNBC

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Alfonso Esparza

Alfonso Esparza

Senior Currency Analyst at Market Pulse
Alfonso Esparza specializes in macro forex strategies for North American and major currency pairs. Upon joining OANDA in 2007, Alfonso Esparza established the MarketPulseFX blog and he has since written extensively about central banks and global economic and political trends. Alfonso has also worked as a professional currency trader focused on North America and emerging markets. He has been published by The MarketWatch, Reuters, the Wall Street Journal and The Globe and Mail, and he also appears regularly as a guest commentator on networks including Bloomberg and BNN. He holds a finance degree from the Monterrey Institute of Technology and Higher Education (ITESM) and an MBA with a specialization on financial engineering and marketing from the University of Toronto.
Alfonso Esparza