China's yuan edges up, set for 5th winning week

CARL COURT  AFP  Getty Images

CARL COURT AFP Getty Images

The People's Bank of China said in response that parameters of the "counter-cyclical factor" are determined by market-making banks based on their own judgement on the macro-economy and the foreign exchange market.

The Chinese yuan strengthened 6.8 percent against the dollar last year, the biggest gain in nine years, reversing three straight years of depreciations. Prior to market opening on Wednesday, the PBOC lowered its official yuan midpoint to the weakest level in almost two weeks to 6.5207 per dollar. Traders confirmed the fixing matched their models, which neutralised the effect of the "X" factor.

The contract for settlement in June 2018 opened 0.05 percent lower at 96.47 yuan.

Iron ore on the Dalian Commodity Exchange on Thursday had dropped 0.4 percent to 556 yuan a tonne. Its offshore counterpart also eased to a two-week low of 6.5450 per dollar in morning trade before paring the losses.

The offshore yuan was trading 0.07 percent weaker than the onshore spot at 6.4864 per dollar.

Economists at ING have forecast the yuan will hold its strength and trade at 6.30 per dollar by year-end.

Robin Xing, economist at Morgan Stanley, told reporters at a news conference on Thursday he believed that policymakers' aim to keep the yuan stable against its basket while the currency may slightly weaken to 6.7 per dollar by the end of the year.

The global dollar index fell to 91.838 from the previous close of 91.852.

The May 2018 rebar contract closed overnight trade at 3864 yuan a tonne, above Wednesday's day session close of 3,849 yuan a tonne. The yuan market at 0358 GMT: ONSHORE SPOT: Item Current Previous Change PBOC midpoint 6.5207 6.4968 -0.37% Spot yuan 6.5218 6.5285 0.10% Divergence from 0.02% midpoint* Spot change YTD 6.52% Spot change since 2005 26.91% revaluation Key indexes: Item Current Previous Change Thomson 95.55 95.66 -0.1 Reuters/HKEX CNH index Dollar index 92.441 92.528 -0.1 *Divergence of the dollar/yuan exchange rate. Negative number indicates that spot yuan is trading stronger than the midpoint. The People's Bank of China (PBOC) allows the exchange rate to rise or fall 2 percent from official midpoint rate it sets each morning.

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 6.6195, 1.91 percent weaker than the midpoint.