(Corrects milestone in headline and first paragraph)
SHANGHAI, March 5 (Reuters) - The yuan briefly hit a
one-week low against a firmer dollar on Friday before recovering
some ground by midday, as investors refrained from testing key
levels while China's annual meeting of parliament came underway.
The onshore spot yuan opened at 6.4747 per dollar
and slipped to a low of 6.4924 at one point in morning trade,
the softest level since Feb. 26.
By midday, the yuan was changing hands at 6.4728, 20 pips
weaker than the previous late session close, and traders said it
was expected to trade sideways at around 6.4730 for the
remainder of the session.
A trader at a foreign bank said the spot market
spontaneously stabilised as the annual meeting of parliament
started this morning, and investors usually avoided volatility
in the financial markets during high-profile political events.
Separately, some market watchers said they were surprised by
the annual economic goals that came in weaker than they had
expected.
China on Friday restored its annual economic growth target,
setting it at above 6%, and pledged to create more jobs in
cities than last year, as the world's second-biggest economy
emerged from a year disrupted by the effects of COVID-19.
"There is in fact not much surprise from the government work
report except for the super-low GDP target," said Iris Pang,
chief economist for Greater China at ING.
"This makes me feel uneasy as I don't know what exactly the
government wants to tell us about the recovery path it expects."
Pang added that other wording on the fiscal and monetary
policies remained the same as last year.
Some analysts said the lower-than-expected growth target
could allow the government to deal with other economic problems.
"2021 offers a rare opportunity since 2008 in the sense that
the government has absolutely no pressure to maintain growth,"
said Zhang Zhiwei, chief economist at Pinpoint Asset Management.
"There is no doubt China will achieve it, likely by a large
margin," he said, adding the government could have capacity to
pay more effort dealing with issues including deleveraging.
Prior to market opening, the People's Bank of China (PBOC)
set the midpoint at 6.4904 yuan per dollar, 146 pips,
or 0.22%, weaker than the previous fix of 6.4758. It was the
weakest since Jan. 4.
The weaker fixing has pushed China's trade-weighted yuan
basket index to 97.06, the highest since June 22,
2018, according to Reuters' calculation based on official data.
By midday, the global dollar index stood at 91.634,
while the offshore yuan was trading at 6.4822 per
dollar.
The yuan market at 0346 GMT:
ONSHORE SPOT:
Item Current Previous Change
PBOC midpoint 6.4904 6.4758 -0.22%
Spot yuan 6.4728 6.4708 -0.03%
Divergence from -0.27%
midpoint*
Spot change YTD 0.86%
Spot change since 2005 27.87%
revaluation
Key indexes:
Item Current Previous Change
Thomson 96.98 96.62 0.4
Reuters/HKEX
CNH index
Dollar index 91.634 91.642 0.0
*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 6.4822 -0.15%
*
Offshore 6.6511 -2.42%
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 Simon
Cameron-Moore)
"low" - Google News
March 05, 2021 at 11:28AM
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CORRECTED-Yuan briefly hits one-week low, steadies as annual parliament meeting begins - Reuters
"low" - Google News
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