Chinese yuan | Image:pexel
The Chinese yuan showed relative stability against the dollar as many global markets remain closed. Trading activity was particularly slow, with market participants expecting volumes to remain low through the final weeks of the year.
The development of the renminbi could be influenced by the actions of exporters in the coming weeks, especially as the Lunar New Year approaches. Analysts have suggested that if more exporters choose to convert their foreign exchange receipts into the renminbi, it could potentially lead to a strengthening of the Chinese currency.
Amid the year-end lull, the spot renminbi showed small fluctuations within a narrow range of less than 100 pips. Trading volume reflected the market weakness and had shrunk to about $5.9 billion by midday, a notable decline compared to last month’s typical half-day trading volume of about $9 billion.
The People’s Bank of China has set the midpoint rate at which the renminbi trades within a 2% range at 7.101 to the dollar, a slight decline of 57 pips compared to the previous rate of 7.0953 pips. became. The spot renminbi opened at 7.1349 per dollar and remained at 7.1361 by midday, marking a slight decline of just 6 pips from its previous close.
At the same time, the trade-weighted CFETS renminbi basket index fell to 97.82, reaching its lowest level since September 11, 2023, according to Reuters calculations based on official data. China releases his CFETS index on a weekly and monthly basis.
More broadly, the World Dollar Index has inched up to 101.709 from its previous close of 101.698, and is hovering around a five-month low. Notably, recent data reveals a decline in US prices in November, the first time this has happened in more than three-and-a-half years. This development has raised expectations in financial markets that the Federal Reserve may cut interest rates in March.
In offshore trading, the yuan depreciated by 74 pips against the onshore spot, trading at 7.1435 yuan to the dollar. As the end of the year approaches, market participants remain focused on subtle shifts in power dynamics, focusing on both global economic factors and local developments that could impact the trajectory of the Chinese currency early in the new year. ing.
(according to Reuters information)