Yuan firms as U.S., China leaders’ dialogue eases economic concerns

HONG KONG, Nov 15 (Reuters) – The yuan strengthened on Tuesday as investors cheered a thaw in tense U.S.-China relations after the world’s top two economic leaders met on the sidelines of the G20 summit. Widespread concern, this was underscored by new data released earlier in the day and put the yuan on track for a fourth straight day of gains against the dollar. The PBOC set the midpoint at 7.0421 before the market opened, up from 7.0899 earlier. The spot market opened at 7.0400 per dollar and traded at 7.0506 midday, 204 points higher than the previous late close and 0.12% below the midpoint. The spot rate currently allows trading within a range of 2% above or below the official fixing on any given day. “The meeting between Chinese President Xi Jinping and U.S. President Joe Biden on the sidelines of the G20 summit has cooled fears of a Cold War,” DBS senior FX strategist Philip Wee and senior economist Radhika Rao wrote in a client note. road. On the sidelines of the G20 summit in Bali, Indonesia, both Xi Jinping and Biden pledged to strengthen communication and agreed that U.S. Secretary of State Antony Blinken would travel to Beijing for follow-up talks. China and the United States clash over a range of issues including trade, technology and Taiwan, which Beijing considers its territory. “This should be seen as a positive outcome of the meeting as communication channels are restarted,” said Maybank analyst Saktiandi Supaat. Domestically, however, an earlier slew of weak Chinese data, including on factory output, retail sales and property investment, underscored the challenges facing policymakers. Dismal data capped gains for the onshore yuan, which rose to a near two-month high against the dollar on Monday, boosted by Beijing’s move to help its struggling real estate sector and ease some of the country’s strict COVID-19 containment measures. . “Weak hard data from China in October has poured cold water on optimism driven by the pivot of COVID and property policy,” said Ken Cheung, chief Asia FX strategist at Mizuho Bank. At 7.049 yuan. The offshore one-year non-deliverable forward (NDF), considered the best proxy for forward-looking market expectations on the yuan’s value, traded at 6.877, 2.40% from the midpoint. The one-year NDF is settled based on the mid-rate rather than the spot rate. The global dollar index rose to 106.975 from the previous close of 106.66. RMB Market at 4:37AM GMT: Onshore Spot Rates: Project Current Pre-Current Change PBOC Midpoint 0.68% 7.0421 7.0899 Spot CNY 7.071 0.29% 7.0506 Divergence from Midpoint* 0.12% YTD Spot Change -9.87% Spot Change Since 2005 Revaluation 17.39% Key Indicator: Item Current Last Change Thomson Reuters/HKEX 0.0 CNH index US Dollar Index 107.017 0.3 106.66 *USD/CNY exchange rate divergence. A negative number indicates that spot yuan trading is stronger than the midpoint. The People’s Bank of China (PBOC) allows the exchange rate to rise or fall 2 percent from an official midpoint rate it sets each morning. Difference between offshore CNH MARKET Instrument Current and onshore offshore spot RMB* 7.049 0.02% Offshore non-deliverable forward 6.877 2.40% ** *Offshore spot to onshore premium** Figures reflect differences with PBOC The difference from the official midpoint, since NDFs are based on the midpoint. . (Reporting by Georgina Lee, Editing by Shri Navaratnam)

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