China's yuan flat, bolstered by authorities' pressure on banks while exports disappoint

Reuters

China's yuan flat, bolstered by authorities' pressure on banks while exports disappoint

2023 6월 7 일, 오전 4:44 GMT

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SHANGHAI, June 7 (Reuters) -China's yuan recovered from a dip that followed weak export data to trade roughly flat on Wednesday, supported by news that major state-owned banks had been told to lower dollar deposit interest rates in an effort to bolster the yuan.

China's exports fell much faster than expected in May year-on-year, while imports contracted at a slower pace, customs data showed on Wednesday.

Prior to the market open, the People's Bank of China set the midpoint rate CNY=PBOC at 7.1196 per U.S. dollar, weakest level since Dec 1st last year.

Spot yuan CNY=CFXS opened at 7.1090 per dollar and was changing hands at 7.1195 around midday, after the disappointing export data, 15 pips weaker than the previous late session close.

Weak exports were widely expected, but "the unexpected magnitude of the decline will add to the bearish China sentiment" despite imports falling at a slower pace, UBS analysts said.

Lin Rongxiong, chief strategist of Essence Securities, said that a weakening yuan is the reflection of anemic recovery in the real economy, and weak growth prospects.

In a rare attempt to bolster China's yuan, a self-regulatory body overseen by the country's central bank has told major state-owned banks to lower dollar deposit interest rates, Reuters reported on Tuesday.

News that U.S. Secretary of State Antony Blinken plans to travel to China also helped support the yuan, as it raised hopes that efforts were underway to reduce geo-political tensions, Maybank analysts said in a note.

By midday, the global dollar index .DXY fell to 104.123 from the previous close of 104.125.

The offshore yuan CNH=D3 was trading 93 pips weaker than the onshore spot at 7.1288 per dollar.

The one-year forward value for the offshore yuan CNH1YOR= traded at 6.925 per dollar, indicating a roughly 2.94% appreciation within 12 months.

The yuan market at 0318 GMT:

ONSHORE SPOT:

Item	Current	Previous	Change
PBOC midpoint CNY=SAEC	7.1196	7.1075	-0.17%
Spot yuan CNY=CFXS	7.1195	7.118	-0.02%
Divergence from midpoint*	0.00%
Spot change YTD			-3.08%
Spot change since 2005 revaluation			16.25%

Key indexes:

Item

Current

Change

Dollar index

104.123

104.125

0.0

*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% from official midpoint rate it sets each morning.

OFFSHORE CNH MARKET

Instrument	Current	Difference from onshore
Offshore spot yuan CNH= *	7.1288	-0.13%
Offshore non-deliverable forwards CNY1YNDFOR= **	6.9253	2.81%

*Premium for offshore spot over onshore CNY=CFXS

**Figure reflects difference from PBOC's official midpoint, since non-deliverable forwards are settled against the midpoint. CNY=SAEC.

Reporting by Shanghai Newsroom; Editing by Simon Cameron-Moore

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