Yuan Eases Over Fear Of Second Wave Virus Infection Sino-US...
SHANGHAI, June 17 (Reuters) - The yuan eased against a rising dollar on Wednesday, dragged lower by worries over a possible second wave of coronavirus infection in mainland China as Beijing raised its emergency response level overnight following an increase in new cases.
Health officials recorded 31 new confirmed infections in Beijing for June 16, https://travelfinderus.shutterfly.com/32 bringing the cumulative infections since Thursday to 137 cases, the worst resurgence of the disease in the city since early February. Prior to market opening, the People's Bank of China (PBOC) set the midpoint rate at 7.0873 per dollar, 118 pips or 0.17% weaker than the previous fix of 7.0755.
In the spot market, the onshore yuan opened at 7.0870 per dollar and was changing hands at 7.0928 at midday, 73 pips weaker than the previous late session close. Traders said apart from the virus fears, concerns over China's tensions with both the United States and India, also weighed on market sentiment with some corporate clients front loading their dollar purchases for seasonal dividend payments.
Investors were cautious ahead of talks later this week between senior Chinese and U.S. officials aimed at finding ways to resolve various issues. Tensions on the disputed border with India boiled over earlier this week, with the Indian Army saying on Tuesday that 20 of its soldiers had been killed in clashes with Chinese troops, in a major escalation of a weeks-long standoff between the two Asian giants in the western Himalayas.
China has not reported any casualties but its military demanded that India immediately stop all infringements and provocative actions. Bo Zhuang, Chief China Economist at TS Lombard said the latest virus outbreak in Beijing was unlikely to reverse China's economic recovery, and the biggest downside risk remained the Sino-U.S.
tensions. "A deeper recession caused by a second wave of the global pandemic or the escalation of U.S.-China economic tensions before the American presidential election in November pose the biggest downside risks to growth for the remainder of this year," he said in a note.
In global markets, the dollar rose against many of its rivals after U.S. retail sales jumped far more than expected in May. The global dollar index rose to 97.033 at midday, when the offshore yuan was trading at 7.0859 per dollar. The yuan market at 0401 GMT: ONSHORE SPOT: Item Current Previous Change PBOC midpoint 7.0873 7.0755 -0.17% Spot yuan 7.0928 7.0855 -0.10% Divergence from 0.08% midpoint* Spot change YTD -1.83% Spot change since 2005 16.69% revaluation Key indexes: Item Current Previous Change Thomson 91.81 91.71 0.1 Reuters/HKEX CNH index Dollar index 97.033 96.99 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 7.0859 0.10% * Offshore 7.214 -1.76% non-deliverable forwards ** *Premium for offshore spot over onshore **Figure reflects difference from PBOC's official midpoint, since non-deliverable forwards are settled against the midpoint.
. (Reporting by Winni Zhou and Andrew Galbraith; Editing by Simon Cameron-Moore)
