Yuan eases to 1-week low but strong GDP data pares losses - Reuters

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    SHANGHAI, Jan 18 (Reuters) - China's yuan eased to a
one-week low against a strong dollar on Monday, but losses were
trimmed by upbeat economic growth data and rising sales of the
dollar by corporates.
    The economy picked up speed in the fourth quarter, with
growth beating expectations to end a rough coronavirus-stricken
2020 in good shape and poised to expand further this year, even
as elsewhere the pandemic raged unabated.
    The strong data lifted the yuan off its one-week low. The
onshore yuan opened at 6.4793 per dollar, fell to a
low of 6.4919, its lowest since Jan. 11, before paring some
losses to 6.4858 by midday.
    Its offshore counterpart was trading at 6.49 per
dollar at noon. 
    That reversed a trend since early December of the offshore
yuan being firmer than the onshore unit, as it is widely
believed to reflect a more precise view of the currency, because
of a lack of daily trading limits. 
    Traders said the onshore premium on Monday could suggest the
short-term strong momentum of the yuan might start to fade, but
markets were still betting on its strength in the long run.
    "I am very upbeat on yuan," said Tommy Xie, head of greater
China research at OCBC Bank in Singapore.
    "I think the USD/CNY can try 6.2 to 6.3 per dollar despite a
recent mixed view on dollar outlook ... RMB appreciation was
mainly driven by long-term fundamentals last year. And the
fundamentals remain intact for now."
    He added that a too rapid rise in the yuan could hurt
exporters and prompt more unwinding of dollar deposits.
    Several traders said they had received rising queries from
corporate clients to convert dollars to yuan for payments ahead
of the week-long Lunar New Year holiday, which starts on Feb.
11. Such conversions will continue to support the yuan.
    Prior to the market open, the People's Bank of China (PBOC)
set the midpoint rate at a two-week low of 6.4845 per
dollar, 212 pips or 0.33% weaker than the previous fix of
6.4633.  

    The yuan market at 0400 GMT: 
    
    ONSHORE SPOT:
 Item               Current  Previous  Change
 PBOC midpoint      6.4845   6.4633    -0.33%
                                       
 Spot yuan          6.4858   6.4817    -0.06%
                                       
 Divergence from    0.02%              
 midpoint*                             
 Spot change YTD                       0.66%
 Spot change since 2005                27.61%
 revaluation                           
 
    Key indexes:
     
 Item            Current     Previous  Change
                                       
 Thomson         95.9        95.89     0.0
 Reuters/HKEX                          
 CNH index                             
 Dollar index    90.81       90.87     -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    6.49      -0.06%
        *                        
 Offshore              6.63      -2.19%
 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 Winni Zhou and Andrew Galbraith; Editing by
Clarence Fernandez)
  

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Yuan eases to 1-week low but strong GDP data pares losses - Reuters
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