China’s yuan nearly steady in thin trade

SHANGHAI: China’s yuan was roughly flat against the dollar on Monday, with trading light given many markets around the world were closed on Christmas Day.

Trading is expected to remain thin for the last week of the year, market participants said.

The yuan could strengthen if more exporters convert their foreign exchange receipts into yuan before the Lunar New Year, they added.

Trade was subdued with the spot yuan swinging in a tight range of less than 100 pips, while the trading volume shrank to roughly $5.9 billion by midday from a normal half-day volume of about $9 billion over the past month.

Prior to the market’s opening, People’s Bank of China set the midpoint rate, around which the yuan is allowed to trade in a 2% band, at 7.101 per US dollar, 57 pips weaker than the previous fix of 7.0953.

The spot yuan opened at 7.1349 per dollar and was changing hands at 7.1361 at midday, only 6 pips weaker than the previous late session close.

Meanwhile, the trade-weighted CFETS yuan basket index fell to 97.82, the lowest since Sept. 11, 2023, according to a Reuters calculation based on official data.

China only publishes the CFETS index on a weekly and monthly basis.

The global dollar index rose to 101.709 from the previous close of 101.698, but still hovering near a five-month low.

Data released on Friday showed US prices fell in November for the first time in more than 3-1/2 years, boosting financial market expectations of an interest rate cut from the Federal Reserve next March.

The offshore yuan was trading 74 pips weaker than the onshore spot at 7.1435 per dollar.

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