China's yuan strengthened on Thursday to its firmest in nearly two months after the dollar slid to nine-week lows following a dovish outlook from the Federal Reserve and as the U.S. president outlined a fresh $1.8 trillion stimulus plan.
President Joe Biden proposed his sweeping new plan in a speech to a joint session of Congress on Wednesday, including $1 trillion in spending on education and healthcare over 10 years and $800 billion in tax credits aimed at low- and middle-income families.
Biden's speech came after Fed Chairman Jerome Powell said on Wednesday that "it is not time yet" to begin discussing any change in policy after the U.S. central bank left interest rates and its bond-buying programme unchanged.
But in an indication that Sino-U.S. tensions that have buffetted the yuan are far from over, Biden's speech took aim at China, pledging to maintain a strong U.S. military presence in the Indo-Pacific and promising to boost technological development and trade.
Before the market open, the People's Bank of China set the yuan's daily midpoint at 6.4715 per dollar, its firmest since March 3.
Guided by the higher fixing, spot yuan opened at 6.4745 per dollar and firmed to 6.4641, its strongest since March 3, before moderating to trade at 6.4716 by midday. That was 73 pips stronger than Wednesday's late session close.
The offshore yuan firmed to 6.4625 per dollar, also its strongest level since March 3. By midday it had retreated to 6.4671 per dollar, still 86 pips stronger on the day.
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