China's yuan eases, set for losing week on seasonal dollar demand

SHANGHAI, July 1 (Reuters) - China's yuan eased against the dollar on Friday and looked set for a losing week, as heavier seasonal corporate demand for the greenback offset fears of a U.S. recession and hopes for domestic economic recovery.

Prior to the market opening, the People's Bank of China (PBOC) set the midpoint rate CNY=PBOC at 6.6863 per dollar, 251 pips or 0.38% firmer than the previous fix 6.7114.

In the spot market, onshore yuan CNY=CFXS opened at 6.6954 per dollar and was changing hands at 6.7045 at midday, 44 pips weaker than the previous late session close.

If the yuan retains all the losses by the late night close, it would have lost 0.22% to the dollar for the week.

Analysts and traders said the yuan weakness was largely driven by their corporate clients' dollar demand as many of the overseas-listed Chinese companies have to make dividend payouts to their foreign shareholders between June and August each year.

Marco Sun, chief financial market analyst at MUFG Bank, said such FX demand from corporate clients was at its peak, as "companies usually picked the timing to purchase large amounts of foreign exchange."

But losses in the yuan on Friday were limited as both official and private surveys showed that China's manufacturing activity expanded in June, as the lifting of COVID lockdowns sent factories racing to meet recovering demand.

"The RMB has stabilised over the past few weeks as 'lockdown' measures have eased and the central government is sounding more determined to spur a growth recovery," analysts at HSBC said in a note.

"The next event risk for the RMB will probably arise from the U.S.'s ongoing review of its Section 301 tariffs. A material rollback of tariffs may push USD/RMB lower."

The cabinet was quoted by state media as saying on Thursday that China would issue 300 billion yuan in financial bonds to replenish capital of key projects, or provide bridge financing for projects funded by special bonds.

Separately, market participants will pay close attention to U.S. ISM manufacturing data due later in the session to gauge the health of the world's largest economy, which could affect the pace of U.S. monetary tightening and global currency markets.

By midday, the global dollar index .DXY rose to 104.931 from the previous close of 104.685, while the offshore yuan CNH=D3 was trading 6.7135 per dollar.

The yuan market at 0403 GMT:


Current Previous Change PBOC midpoint

6.6863 6.7114

0.38% CNY=SAEC

Spot yuan

6.7045 6.7001

-0.07% CNY=CFXS

Divergence from



Spot change YTD

-5.21% Spot change since 2005

23.45% revaluation

Key indexes:



Previous Change




-0.3 Reuters/HKEX

CNH index

Dollar index


104.685 0.2

*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.


Current Difference

from onshore Offshore spot yuan


-0.13% CNH= *



-0.22% non-deliverable



*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 Winni Zhou and Brenda Goh; Editing by Kim Coghill

Disclaimer: The XM Group entities provide execution-only service and access to our Online Trading Facility, permitting a person to view and/or use the content available on or via the website, is not intended to change or expand on this, nor does it change or expand on this. Such access and use are always subject to: (i) Terms and Conditions; (ii) Risk Warnings; and (iii) Full Disclaimer. Such content is therefore provided as no more than general information. Particularly, please be aware that the contents of our Online Trading Facility are neither a solicitation, nor an offer to enter any transactions on the financial markets. Trading on any financial market involves a significant level of risk to your capital.

All material published on our Online Trading Facility is intended for educational/informational purposes only, and does not contain – nor should it be considered as containing – financial, investment tax or trading advice and recommendations; or a record of our trading prices; or an offer of, or solicitation for, a transaction in any financial instruments; or unsolicited financial promotions to you.

Any third-party content, as well as content prepared by XM, such as: opinions, news, research, analyses, prices and other information or links to third-party sites contained on this website are provided on an “as-is” basis, as general market commentary, and do not constitute investment advice. To the extent that any content is construed as investment research, you must note and accept that the content was not intended to and has not been prepared in accordance with legal requirements designed to promote the independence of investment research and as such, it would be considered as marketing communication under the relevant laws and regulations. Please ensure that you have read and understood our Notification on Non-Independent Investment. Research and Risk Warning concerning the foregoing information, which can be accessed here.

We are using cookies to give you the best experience on our website. Read more or change your cookie settings.

Risk Warning: Your capital is at risk. Leveraged products may not be suitable for everyone. Please consider our Risk Disclosure.