Search

Yuan edges down dollar, market awaits Q2 data

Reuters - Friday, July 3

* China Q2 data seen pointing to further economic recovery

* Foreign trade may remain weak

* Yuan seen stable in Q3 but may rise in Q4

By Lu Jianxin and Edmund Klamann

SHANGHAI, July 3 - The yuan edged down against the dollar on Friday as the Chinese central bank fixed a lower reference rate after the dollar rose globally overnight on risk-aversion buying propelled by weak U.S. June employment figures.

But yuan trading was quiet as dealers said the market was awaiting China's official economic data for June and the second quarter, to be mainly released starting late next week, for hints of the possible changes to the country's foreign exchange policy.

Spot yuan <CNY=CFXS> was trading at 6.8325 against the dollar at midday, down slightly from Thursday's close of 6.8314 after the central bank fixed the yuan's daily mid-point <CNY=SAEC> at 6.8333 versus the dollar, down marginally from Thursday's 6.8309.

So far, only one set of data for June has been published, which indicated the country's economy was continuing improvements seen earlier this year. The official purchasing managers' index for June rose to 53.2 from 53.1 in May, consolidating for the fourth month in a row above the watershed mark of 50. [ID:nPEK138883]

Fan Gang, an economist who advises the central bank, said this week that China's economic recovery was sustainable. In particular, exports would grow again, from a low base, by the end of the year, he said. [ID:nPEK153534]

"The market generally expects second-quarter data will show foreign trade has yet to recover, encouraging the central bank to keep the yuan stable for a short period," said a dealer at an Asian bank in Shanghai.

But he and several others said second-quarter data as a whole might indicate that China's economy was heading for a full recovery. In this case, a Chinese currency policy change towards a stronger yuan was possible later in the year.

Offshore, benchmark one-year dollar/yuan non-deliverable forwards <CNY1YNDFOR=> rose to 6.7530 bid at midday on Friday, compared with Thursday's close of 6.7450 in response to the dollar's global strength.

Twelve-month yuan appreciation implied by the NDFs, which move inversely with the NDFs' levels, edged lower to 1.19 percent, measured from the Chinese central bank's daily mid-point, compared with 1.27 percent implied on Thursday.

Sign in to recommend this article »
0 users recommend

Related Articles: Business