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China yuan weakens on softer c.bank fixing

    SHANGHAI, April 8 (Reuters) - China's yuan edged lower
against the U.S. dollar on Thursday on a weaker central bank
fixing, but remained near a multi-year high against a basket of
other currencies.
    Minutes of the U.S. Federal Reserve's March policy meeting
provided few catalysts to the market.
    Fed officials remained cautious about the risks posed by the
COVID-19 pandemic to the U.S. economy, despite the boost from
massive fiscal stimulus, and expects to keep supporting the
economy "for some time," the minutes showed Wednesday.

    Before the open, the People's Bank of China set the yuan's
daily midpoint at 6.5463 per dollar, weaker than the
previous fix of 6.5384. 
    After opening at 6.5500 per dollar, spot yuan
firmed slightly to 6.5470 by midday, but was still 35 pips
weaker than Wednesday's late session close. 
    The offshore yuan softened to 6.5506 per dollar
from 6.5494 on Wednesday. 
    "The yuan is likely to fluctuate in a small range in the
near term. There's no strong logic for it to break out," said a
trader at a Chinese bank. "(But) a round of appreciation may be
brewing if this sideways trend is prolonged."
    The dollar index barely budged on Wednesday after the
minutes' release, falling to 92.39 from a close of 92.414.
    Prospects for a rapid U.S. recovery have boosted the dollar
and U.S. yields this year. That has weighed on the yuan, which
dipped nearly 2.4% between late January and late March.
    A weaker yuan and shrinking premiums over U.S. debt drove
foreign investors to reduce their holdings of Chinse sovereign
debt in March, the first monthly drop in more than two years.

    But while the yuan has weakened against the U.S. dollar, it
has retained strength against other currencies. 
    The Thomson Reuters/HKEX Global CNH index, which
tracks the offshore yuan against a basket of currencies on a
daily basis, stood at 96.58, just half a percent off a 33-month
high touched on March 24.
    China's CFETS trade-weighted yuan basket has gained about 2%
this year, according to Reuters' calculations based on official
data
    "CFETS is close to near-term highs and it will be important
to see if it can break past the 2018 highs, and that shall set
the tone for next leg of renminbi, in our view," analysts at
Citi said in a note.

    The yuan market at 4:00AM GMT: 
    
    ONSHORE SPOT:
 Item               Current  Previous  Change
 PBOC midpoint      6.5463   6.5384    -0.12%
                                       
 Spot yuan          6.547    6.5435    -0.05%
                                       
 Divergence from    0.01%              
 midpoint*                             
 Spot change YTD                       -0.29%
 Spot change since 2005                26.42%
 revaluation                           
 
    Key indexes:
     
 Item            Current     Previous  Change
                                       
 Thomson         96.58       96.61     0.0
 Reuters/HKEX                          
 CNH index                             
 Dollar index    92.39       92.414    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    6.5506    -0.05%
        *                        
 Offshore              6.7294    -2.72%
 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 Andrew Galbraith; Additional reporting by Xiao
Han in Beijing; Editing by Kim Coghill)
  
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