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Yuan up; US pressure for yuan rise renews
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SHANGHAI: The yuan closed up against the dollar on Thursday after the People's Bank of China fixed a stronger mid-point to reflect an overnight dollar fall in global markets. But dealers said the Chinese central bank's strong fixing was not a response to fresh US pressure for the yuan to appreciate.
Some US circles believe that a volatile political environment is boosting the possibility that US lawmakers will pass legislation designed to prod China into letting its currency rise more rapidly against the dollar.
"The chances are certainly on the rise, I think for two reasons," Jeremie Waterman, senior director for China at the US Chamber of Commerce, told Reuters.
The first is the testy political atmosphere ahead of November congressional elections that has many Democrats in fear of losing their seats, and the other is the "very limited progress" Beijing has made revaluing its yuan since a high-profile announcement in June, Waterman said. But traders at the China Foreign Exchange System, the domestic market, are not convinced that such pressure will have any major impact on the movements of the yuan's exchange rate.
The PBOC set the mid-point, or its reference rate from where the yuan can rise or fall 0.5 per cent on the dollar each day, at 6.7817 on Thursday, up from Wednesday's 6.7907.
Spot yuan closed at 6.7832 on Thursday, up from Wednesday's close of 6.7943. The yuan is now up 0.63 per cent from June 19, when the PBOC announced the abolition of a two-year peg to the dollar, compared with appreciation of as much as 0.91 per cent on Aug. 9.
Offshore, benchmark one-year dollar/yuan non-deliverable forwards (NDFs) were bid at 6.6980 late on Thursday, down from 6.7083 at Wednesday's close. -Reuters
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