Yuan hits 1-week low as Brexit, U.S. stimulus uncertainty aids dollar - Reuters

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    SHANGHAI, Dec 10 (Reuters) - China's yuan weakened to a
one-week low against the dollar on Thursday as increasing
political uncertainties over U.S. stimulus talks and Brexit
negotiations aided safe-haven support for the greenback.
    Despite rising short-term yuan volatility, many economists
remain bullish on the currency, citing continuous foreign
inflows and China's strong economic recovery.
    In the onshore market, the spot yuan was changing
hands at 6.5430 at midday, having touched 6.5527, the weakest
level since Dec. 3. The People's Bank of China set the midpoint
rate at 6.5476 per dollar prior to market open, the
lowest since Dec. 4.
    "Participants appeared to be less bullish on the RMB outlook
in the near-term," wrote Ken Cheung, strategist at Mizuho Bank
Ltd.
    The choppy performance "reflected the solid USD buying
demand from banks and corporates at 6.50 handle by year-end." 
    The dollar index, which tracks a basket of major
currencies, rebounded to nearly 91 on Thursday, from a low of
90.47 a week ago.
    Uncertainly over U.S. stimulus and Brexit weighed on global
investor sentiment, increasing dollar demand, Keung said. 
    However, Lu Ting, China economist at Nomura, expects the
yuan to strengthen further to 6.25 against the greenback by the
end of 2021, saying a strong yuan helps attract foreign capital,
discouraging supply chain migration.
    China's exports jumped 21.1% in November, the fastest pace
in almost three years, despite the yuan's strong gain that
month.
    "In light of strong China exports figure, the PBoC should
have a higher tolerance to allow more RMB strength but the
one-way RMB appreciation expectation is probably not to be
encouraged," Cheung wrote. 
    The Thomson Reuters/HKEX Global CNH index, which
tracks the offshore yuan against a basket of currencies on a
daily basis, stood at 95.39, weaker than the previous day's
95.6. The offshore yuan was trading at 6.5268 per
dollar. 

    The yuan market at 4:39AM GMT: 
    
    ONSHORE SPOT:
 Item               Current  Previous  Change
 PBOC midpoint      6.5476   6.5311    -0.25%
                                       
 Spot yuan          6.5413   6.545     0.06%
                                       
 Divergence from    -0.10%             
 midpoint*                             
 Spot change YTD                       6.45%
 Spot change since 2005                26.53%
 revaluation                           
 
    Key indexes:
     
 Item            Current     Previous  Change
                                       
 Thomson         95.39       95.6      -0.2
 Reuters/HKEX                          
 CNH index                             
 Dollar index    90.994      91.096    -0.1
 
    
    
*Divergence of the dollar/yuan exchange rate. Negative number
indicates that spot yuan is trading stronger than the midpoint.
The People's Bank of China (PBOC) allows the exchange rate to
rise or fall 2% from official midpoint rate it sets each
morning.

    OFFSHORE CNH MARKET   
  
 Instrument            Current   Difference
                                 from onshore
 Offshore spot yuan    6.5268    0.22%
        *                        
 Offshore              6.6763    -1.93%
 non-deliverable                 
 forwards                        
               **                
 
*Premium for offshore spot over onshore
**Figure reflects difference from PBOC's official midpoint,
since non-deliverable forwards are settled against the midpoint.
. 

 (Reporting by Samuel Shen and Andrew Galbraith; Editing by Sam
Holmes)
  

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