HONG KONG: China’s yuan firmed against the US dollar on Friday as the central bank set the daily fixing stronger and as expectations of dollar weakness supported the currency.
Prior to the market opening, the People’s Bank of China set the midpoint rate at 7.1695 per dollar – its strongest since March 17 and 106 pips firmer than a Reuters’ estimate.
The PBOC has guided the yuan’s daily fixings firmer in recent sessions — a move viewed as an effort to boost confidence in the currency amid an uneven Chinese economy and uncertainty over Sino-US trade talks.
Meanwhile, China kept benchmark lending rates unchanged as expected on Friday, after Beijing rolled out sweeping monetary easing measures a month earlier to support the economy.
By 0400 GMT, the yuan was 0.08% higher at 7.1811 to the dollar after trading in a range of 7.1756 to 7.1822.
Its offshore counterpart traded at 7.1819 yuan per dollar, up about 0.06% in Asian trade.
The sluggish dollar performance in June amid concerns over the ballooning US fiscal deficit and the durability of US assets due to the trade war, also helped the yuan.
“Emerging market currencies are marginally stronger versus the dollar month-to-date and have held onto their May gains”, Goldman Sachs analysts said in a note.
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The bank expects some low yielding Asian currencies, including Chinese yuan, to continue to perform well versus the dollar.
The yuan is up 0.3% against the dollar this month, and 1.7% this year.
The PBOC governor vowed to promote further yuan internationalisation at the 2025 Lujiazui Forum earlier this week, also lifting sentiment.
Separately, the Hong Kong dollar hit 7.85 per US dollar on Friday, touching the weak end of its trading band against the dollar for the first time since May 2023, according to LSEG data.
American Dollar Exchange Rate