Yuan slips from 3-week peak, tariffs dampen mood

Reuters

Yuan slips from 3-week peak, tariffs dampen mood

2024 8월 27 일, 오전 4:08 GMT

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SINGAPORE, Aug 27 (Reuters) -China's yuan eased on Tuesday as a five-week winning streak on the dollar started to lose steam and traders bet on the currency settling into a new range until the economy improves.

Late in the Asia morning it traded at 7.1277 per dollar CNY=CFXS, weaker than Monday's three-week top of 7.1135. In offshore trade CNH=D3 the yuan was at 7.1271.

Industrial profit growth accelerated a little bit in July, official data showed on Tuesday, though figures out earlier in August had shown slowing exports.

Canada vowing a 100% tariff on Chinese electric vehicles and 25% on steel and aluminium did not help sentiment either, especially since exports are propping up an otherwise slowing Chinese economy.

The yuan is up 1.3% against the dollar this month, mostly thanks to the dollar's slide in anticipation of U.S. rate cuts.FRX/

UOB analysts said it would telling if the dollar fell through offshore yuan chart support at 7.0835 and 7.0636 and in the near term expect range trading between 7.1150 and 7.1350.

Because the dollar has fallen broadly, the currencies of many of China's trading partners have rallied and the yuan's trade-weighted value has dropped.

The official trade-weighted index .CFSCNYI has given up its gains for the year and was at 97.89 when it was last published, on Friday. Against the euro EURCNY=R the yuan was at 7.9558, near the bottom of a range it has kept for a year.

"A falling trade-weighted CNY is ... consistent with the PBOC's monetary easing stance," said RBC Capital Markets' strategist Alvin Tan.

Prior to the market opening, the People's Bank of China set the midpoint rate CNY=PBOC, around which the yuan is allowed to trade in a 2% band, at 7.1249 per dollar, four pips weaker than a Reuters' estimate.

Chinese government 10-year bond yields CN10YT=RR rose 0.2 basis points to 2.17%. The yield on similar U.S. government benchmark debt was 3.8%. The dollar's six-currency index =USD was last 100.88, down 3% through August.

Key onshore vs offshore levels:

Overnight dollar/yuan swap onshore -7.80 pips vs. offshore -7.80
Three-month SHIBOR SHIBOR= 1.8 % vs. 3-month CNH HIBOR 2 %

LEVELS AT 03:43 GMT GMT

INSTRUMENT	CURRENT vs USD	UP/DOWN(-) VS. PREVIOUS CLOSE %	% CHANGE YR-TO-DATE	DAY'S HIGH	DAY'S LOW
Spot yuan <CNY=CFXS	7.1251	-0.03	-0.33	7.1247	7.1288
Offshore yuan spot CNH=D3	7.1259	-0.05	-0.01	7.1223	7.1306