SHANGHAI, June 10 (Reuters) – China’s yuan briefly hit a one-week high against a weaker dollar on Thursday, with investors encouraged by Chinese and U.S. commerce officials agreeing to promote healthy trade and cooperate over differences during discussions by telephone.
China said on Thursday its commerce minister Wang Wentao spoke to his U.S. counterpart Gina Raimondo, and both sides recognised the importance of business exchanges and pledged to keep lines of communication open.
Prior to the market’s open, the People’s Bank of China (PBOC) set the midpoint rate CNY=PBOC at 6.3972 per dollar, 16 pips weaker than the previous fix of 6.3956.
In the spot market, onshore yuan CNY=CFXS opened at 6.3840 per dollar and rose to a high of 6.38, the strongest level since June 3. By midday, it was changing hands at 6.3854, 11 pips firmer than the previous late session close.
A trader at a foreign bank said the market would pay close attention to U.S. inflation data due later in global day, which could provide a clue to how fast the Federal Reserve will begin tapering its monetary stimulus.
Closer to home, PBOC governor Yi Gang told a forum in Shanghai that said he expected China’ss annual average inflation to be below 2% this year.
Meanwhile, Pan Gongsheng, head of the State Administration of Foreign Exchange, said two-way volatility in the yuan exchange rate would become normal.
By midday, the global dollar index =USD rose to 90.197 from the previous close of 90.14, while the offshore yuan CNH=D3 was trading at 6.3822 per dollar.
The yuan market at 0426 GMT:
PBOC midpoint CNY=SAEC
Spot yuan CNY=CFXS
Divergence from midpoint*
Spot change YTD
Spot change since 2005 revaluation
Thomson Reuters/HKEX CNH index
*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
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