HONG KONG, Nov 15: China’s yuan steadied against the dollar on Friday on suspected central-bank intervention via big state-owned banks to stem the currency’s rise after an early bout of dollar-selling by companies.
Traders expect the yuan to stay in a tight range and 6.09 remains a psychological barrier in the near term until the People’s Bank of China (PBOC) gives a clear signal to allow a fresh round of appreciation.
Spot yuan traded at 6.0912 per dollar near midday, up 0.02 percent from Thursday’s close of 6.0922. The PBOC fixed the yuan’s midpoint at 6.1351, 0.06 percent weaker than the previous day’s 6.1315.
‘There was strong dollar selling after the opening, which pushed the yuan to 6.0911, but then big state-owned banks came in to buy dollars immediately,’ said a trader at a Chinese bank in Shanghai.
‘We thought the central bank would let the yuan appreciate more toward the year-end, but sustaining interventions made us curious where it would like it to move,’ the trader said.
The Chinese currency has risen more than 2 percent so far this year and its steady rise has attracted capital flows from global investors who have sought shelter from other volatile currencies.
Capital inflows to the ‘redback’ may be further supported given that the U.S. Is likely to continue its ultra-easy monetary policy until a durable economic recovery is in place that can sustain job creation.
Fed Vice Chair Janet Yellen on Thursday robustly defended the Federal Reserve’s bold steps to spur economic growth, calling efforts to boost hiring an ‘imperative’ at a hearing into her nomination to become the first woman to lead the U.S. Central bank.
Market participants are also waiting for more details of China’s reform plans, which are usually announced a week after the conclusion of the Communist Party’s third plenum on Tuesday.
(AGENCIES)
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