Yuan inches up as investors await Trump speech.
SHANGHAI, Nov 12 (Reuters) – China’s yuan made modest gains against the dollar on Tuesday, as investors awaited a key speech for more clues on the Sino-U.S. trade talks.
U.S. President Donald Trump is due to give a speech to the Economic Club of New York on Tuesday.
Trump wrongfooted markets over the weekend when he said there had been incorrect reporting about U.S. willingness to lift tariffs on China, dashing recent hopes for progress in the trade negotiations between the two economic superpowers.
In the spot market, the onshore spot yuan CNY=CFXS opened at 7.0050 per dollar and was changing hands at 7.0038 at midday, 67 pips firmer than the previous late session close. The spot rate is currently allowed to trade within a range 2% above or below the official fixing on any given day.
Before Tuesday’s market opening, the People’s Bank of China (PBOC) set the yuan’s midpoint rate CNY=PBOC at 6.9988 per dollar, 55 pips weaker than the previous fix of 6.9933, following four straight sessions of firmer settings.
“For the short-term, the yuan would tend to be rangebound, without substantial depreciation or a trend,” said a Shanghai-based trader at a foreign bank.
New bank loans in China fell more than expected in October to the lowest in 22 months, but the drop was likely due to seasonal factors with policymakers still expected to ramp up support for the cooling economy in coming months.
“The October social financing was obviously below forecasts, indicating twists and turns in the process of China’s loosening credit,” analysts at Guosheng Securities said in note, adding PBOC could continue to lower financing costs via price-based monetary policies.
Sheng Songcheng, an adviser to the People’s Bank of China (PBOC), said Chinese policymakers should pursue fiscal policy and cut interest rates to support flagging economic growth, a financial magazine Yicai reported on Tuesday.
But with China not facing the same deflationary pressures that exist overseas, policymakers should focus on fiscal measures as their first consideration, with monetary policy playing a supporting role, Yicai said.
The global dollar index .DXY rose to 98.268 from the previous close of 98.2.
The offshore yuan CNH=D3 was trading -0.01 percent away from the onshore spot at 7.0059 per dollar.