China’s yuan eased against the U.S. dollar on Thursday on rising corporate demand for the greenback, traders said.
The People’s Bank of China set the midpoint rate at 6.7211 per dollar prior to market open, 6 pips weaker than the previous fix 6.7205.
In the spot market, the yuan opened at 6.7265 per dollar and was changing hands at 6.7279 at midday, 69 pips weaker than the previous late session close and 0.10 percent softer than the midpoint.
Corporate demand for the dollar percolated in morning trade, underpinned by views in some quarters that dollar costs may rise, which dragged spot yuan lower.
“Corporate demand for the greenback was rising at the current levels, which were relatively the best quotes so far this year,” said a trader at a regional bank in Shanghai, noting the recent weakness in the dollar had saved exchange costs for companies who have business-related dollar requirements.
The trader said he did not expect the yuan to strengthen across the psychologically-important 6.7 per dollar level ahead of the Party Congress this fall.
Some companies with dollar positions were still looking for opportunities to liquidate and stop exchange losses, another trader said, adding that unlike companies, traders were largely sidelined.
The Thomson Reuters/HKEX Global CNH index, which tracks the offshore yuan against a basket of currencies on a daily basis, stood at 93.83, weaker than the previous day’s 93.84.
The global dollar index rose to 92.961 from the previous close of 92.836.
The offshore yuan was trading 0.08 percent weaker than the onshore spot at 6.733 per dollar.
Offshore one-year non-deliverable forwards contracts (NDFs), considered the best available proxy for forward-looking market expectations of the yuan’s value, traded at 6.8755, 2.25 percent weaker than the midpoint.
One-year NDFs are settled against the midpoint, not the spot rate.