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SHANGHAI: China´s yuan eased on Friday after the central bank weakened its yuan midpoint by the most in three months, but the Chinese currency is on course for a winning week, thanks to a volatile U.S. dollar.
The People´s Bank of China set its official midpoint at 6.8786 per dollar prior to the market open on Friday, snapping a six-day winning streak, 174 pips or 0.25 percent weaker than the previous guidance at 6.8612, the biggest daily percentage loss since Feb. 20. The weakness in the yuan midpoint came after a rebound in the U.S. dollar overnight in the global markets, supported by solid U.S. economic data that helped temper a sell-off triggered by political tumult in Washington.
However, the much weaker fixing on Friday was still stronger than market expectations, traders said, and such a situation has remained for weeks.
In the spot market, the yuan opened at 6.8937 per dollar and was changing hands at 6.8925 at midday, 65 pips weaker than the previous late session close and 0.20 percent weaker than the midpoint. For the week, the yuan is set to gain 0.1 percent against the U.S. unit. "The dollar demand by bank clients was strong and pushed the (USD/CNY) transaction prices higher in morning trade," said a dealer at a Chinese bank, but added the market was still trying to find direction.