Yuan Weakens On Softer Central Bank Fixing

Yuan Weakens On Softer Central Bank Fixing

08 Apr 2021 10:50 AM
 

China's yuan edged lower against the U.S. dollar today on a weaker central bank fixing, but remained near a multi-year high against a basket of other currencies.

Minutes of the U.S. Federal Reserve's March policy meeting provided few catalysts to the market.

Fed officials remained cautious about the risks posed by the COVID-19 pandemic to the U.S. economy, despite the boost from massive fiscal stimulus, and expects to keep supporting the economy "for some time," the minutes showed Wednesday.

Before the open, the People's Bank of China set the yuan's daily midpoint at 6.5463 per dollar, weaker than the previous fix of 6.5384.

After opening at 6.5500 per dollar, spot yuan firmed slightly to 6.5470 by midday, but was still 35 pips weaker than Wednesday's late session close.  The offshore yuan softened to 6.5506 per dollar from 6.5494 on Wednesday.

Prospects for a rapid U.S. recovery have boosted the dollar and U.S. yields this year. That has weighed on the yuan, which dipped nearly 2.4% between late January and late March.

A weaker yuan and shrinking premiums over U.S. debt drove foreign investors to reduce their holdings of Chinse sovereign debt in March, the first monthly drop in more than two years. But while the yuan has weakened against the U.S. dollar, it has retained strength against other currencies.