HONG KONG, Mar 31: China’s yuan firmed against the dollar on Tuesday, bucking a trend of regional currency weakness with help from buoyant mainland markets after authorities signaled they would act to prevent a wider economic slowdown.
To reverse a slide in property sales, the People’s Bank of China said on Monday Chinese homebuyers will be able to shell out smaller downpayments on houses. In response, equity markets hit fresh seven-year highs on Tuesday. The PBOC set Tuesday’s yuan midpoint rate at 6.1422 per dollar prior to market open, weaker than the previous fix of 6.1402.
In the onshore market, spot yuan was changing hands at 6.2039 per dollar at midday, slightly stronger than Monday’s close of 6.2077 and 1 percent away from the midpoint. In terms of technicals, at current levels, the yuan is flirting with a key resistance level around the 100-day moving average. This has been a level that the yuan has tried to break through earlier but hasn’t succeeded since December 2014.
A conclusive break will help the yuan rise further. In the broader currency markets, the dollar was firmer against most of its peers, having posted its biggest one-day rally in over a month against the yen and notching up solid gains on its Australian counterpart. The offshore yuan was trading slightly weaker than the onshore spot at 6.207 per dollar.
Offshore one-year non-deliverable forwards contracts (NDFs), considered the best available proxy for forward-looking market expectations of the yuan’s value, traded at 6.3475, or 3.23 percent weaker than the daily midpoint fixing.
(AGENCIES)
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