China’s yuan firmed on Tuesday after data showed Chinese holdings of U.S. Treasuries dipped in June, and as the dollar weakened.
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The PBOC who have earlier adopted a more transparent method of midpoint fixing set the midpoint rate at 6.6543 to a dollar which is stronger than the previous fix at 6.6543, the fix was set just before the market opened.
The currency dropped 0.21 percent to 6.6468 per dollar as of 9:49 a.m.in Shanghai, according to prices from the China Foreign Exchange Trade System.
The central parity rate of the Chinese currency renminbi, or the yuan, strengthened 113 basis points to 6.643 against the USA dollar Monday, according to the China Foreign Exchange Trading System.
China’ foreign exchange reserves fell by $4.1 billion in July to $3.20 trillion, central bank data showed.
The yuan’s spot rate is now allowed to trade at a range of 2% above or below the official midpoint fixed on any trading day.
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Government bonds advanced, with the 10-year yield dropping two basis points to 2.64 percent, according to National Interbank Funding Center prices. One-year NDFs are settled against the midpoint, not the spot rate. The offshore yuan fell 0.04 percent, while the People’s Bank of China strengthened its daily reference rate by 0.17 percent. OFFSHORE CNH MARKET Instrument Current Difference from onshore Offshore spot yuan 6.6426 -0.09% * Offshore 6.7725 -2.10% non-deliverable forwards **Premium for offshore spot over onshore **Figure reflects difference from PBOC’s official midpoint, since non-deliverable forwards are settled against the midpoint.
