Updated January 9th, 2024 at 17:52 IST
China's Yuan rebounds amid economic caution and policy anticipation
Market participants in China remained cautious, eyeing crucial economic indicators.
Yuan rebounds: The Chinese Yuan rebounded on Monday, recovering from a three-week low against the Dollar. However, this resurgence was tempered as investors grappled with the implications of US job data and the evolving monetary policies within the world's largest economy.
Market participants in China remained cautious, eyeing crucial economic indicators slated for release later in the week, including December credit lending, trade statistics, and inflation figures. Additionally, anticipation loomed over the impending fourth-quarter GDP data, all of which were seen as barometers for the nation's economic health.
Win Thin, global head of currency strategy at Brown Brothers Harriman, expressed concerns about looming deflationary risks, projecting further easing measures in the weeks ahead.
The People's Bank of China (PBOC) set the Yuan's midpoint rate at 7.1006 per Dollar, maintaining a trend of guiding rates above market expectations in a bid to stabilize the yuan, as noted by traders and analysts.
Experts at Maybank highlighted the USD/CNH pair's range-bound movement despite the recent bullish retracement of the dollar, attributing the yuan's strength to a robust yuan fix.
The onshore yuan rebounded from its recent low to trade at 7.1566 at midday on Monday, while its offshore counterpart hovered around 7.1697 per dollar. Analysts and investment houses, including Citi, foresee potential monetary easing in January, with expectations of rate cuts and reductions in banks' reserve requirement ratios (RRR) throughout 2024.
As China braces to renew 779 billion Yuan ($108.83 billion) worth of medium-term policy loans this month, all eyes are on potential rate adjustments during the loan prime rate (LPR) fixing on January 22, in efforts to bolster economic recovery.
(with Reuters inputs)
Published January 8th, 2024 at 11:56 IST