By Pete Sweeney
SHANGHAI, Sept 30 The Chinese yuan rose slightly
on Monday morning after the central bank lifted the official
guidance rate, but trading was narrow and volumes moderate as
traders prepared for markets to close on Tuesday for a week.
Traders continued to predict that the spot yuan
would remain near 6.12 per dollar, a range it has hugged tightly
The People's Bank of China (PBOC) set the official midpoint
guidance rate up slightly on Monday morning at 6.1480
per dollar. Traders say that the bank is using a combination of
high midpoint settings and behind the scenes intervention to
bring the spot price and the fixing closer into line.
Economists, traders and investors have been closely
monitoring news coming from the opening of China's new free
trade zone in Shanghai, which regulators have touted as a test
bed for experimenting with deep changes to the country's
"The FTZ is Shanghai's biggest opportunity since the opening
of the Pudong [district in Shanghai]," said Stephen Zhu,
director of Ashland Partners International Ltd.
"Seizing this opportunity is vital for Shanghai if it aims
to become an influential city not only in China, but also in
Shanghai officials on Sunday said they planned to allow
domestic and foreign banks to conduct cross-border financing
business from the zone, and also allow individual investors in
the zone to freely buy equities in China or overseas without
going through one of the existing qualified investor programmes,
which operate under a quota system.
Markets will reopen for business on Tuesday Oct. 10.
The onshore spot yuan market at a glance:
Item Current Previous Change
PBOC midpoint 6.148 6.1495 +0.02%
Spot yuan 6.119 6.1202 +0.02%
Divergence from -0.47%
Spot change ytd +1.82%
Spot change since 2005 revaluation +35.26%
*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 1 percent from official midpoint rate it sets each
OFFSHORE CNH MARKET
The offshore yuan market at a glance:
Instrument Current Difference from onshore
Offshore spot yuan 6.1185 0.00%*
Offshore non-deliverable 6.1995 -0.83%**
*Premium for offshore spot over onshore
**Figure reflects difference from PBOC's official midpoint,
since non-deliverable forwards are settled against the midpoint.
- Shanghai FTZ no threat to HK just yet
- CHINA MONEY - PBOC preparing market for more yuan
- ANALYSIS-Bullish yuan herd leaves China fundamentals in
- Currency war or no, Beijing doesn't want Asia to take
stable yuan for granted
KEY DATA POINTS
- Gap between PBOC midpoint and spot rate is narrowing.
- China's trade surpluses mainly driven by weak imports
rather than strong exports. GRAPHIC: link.reuters.com/qav68s
- Corporate FX purchases in July show reduction in yuan
appreciation expectations. GRAPHIC: link.reuters.com/tyx74t
- Hot money outflows reach record high in July GRAPHIC: link.reuters.com/saz74t
- Despite relatively stable dollar/yuan exchange rate, the
yuan is appreciating on a trade-weighted basis. GRAPHIC: link.reuters.com/sed74t
(Additional reporting by Shen Yiming in SHANGHAI and Coco Li in
BEIJING; Editing by Eric Meijer)