This daily digest focuses on Yuan rates, major Chinese economic data, market sentiment, new developments in China’s foreign exchange policies, changes in financial market regulations, as well as market news typically available only in Chinese-language sources.
– The offshore Dollar/Yuan was testing a major support of 6.9354 on Monday after pulled back from the record high.
- The PBOC Deputy Governor Yi Gang ruled out a possibility of re-pegging the Yuan against the U.S. Dollar.
– Both the Chinese banking and insurance regulators announced to strengthen oversight on financial sectors.
Yuan Rates
The PBOC strengthened the Yuan against the U.S. Dollar by +126 pips or +0.18% on Monday after weakened it for three consecutive trading days. The offshore Yuan rose against the Dollar, with the USD/CNH dipping 6.9196 within two hours following the release of the Yuan fix. However, the retracement seen in the USD/CNH was not solely driven by the PBOC’s guidance; as we can see from the 1-hour chart, the ICE’s Dollar Index (DXY) dropped over the same span of time as well, meaning Dollar moves have contributed to the Yuan pair. In the near term, market forces will likely continue to be the primary driver to Dollar/Yuan rates, as the PBOC has shown signs of tolerance on Yuan moves. In terms of levels, the offshore Yuan pair was testing a major support of 6.9354 (361.8% extension of the previous major move and the top of a parallel) at the moment.
USD/CNH 1-Hour
Prepared by Renee Mu.
Compared to other currencies, the Yuan’s loss against the Dollar was relatively small. The CFETS Yuan Index and the BIS Yuan Index rose +0.13% and +0.15% respectively to 94.67 and 96.04 on November 25 from a week ago; the SDR Yuan Index, in which the U.S. Dollar has the largest weighing among all three basket indexes, fell slightly by -0.04% to 95.29; over the same span of time, the Yuan lost -0.60% against the Dollar offshore and -0.47% onshore. This indicates that the Yuan remained basically stable against a basket of currencies, despite of the record-setting levels seen in Dollar/Yuan rates.
