WSJ:China Yuan Down Late; Dollar Up After Minutes Show Divided Fed
Vs Parity Previous
USD/CNY Central Parity 6.3215 6.3209
USD/CNY OTC 0830 GMT 6.3733 +0.82% 6.3686
High 6.3746 +0.84%
Low 6.3682 +0.74%
SHANGHAI--China's yuan fell against the U.S. dollar late Thursday with the central bank guiding the currency lower, after the greenback rose overnight following minutes from the latest U.S. Federal Reserve policy meeting showed officials were split over the timing and necessity of further stimulus.
On the over-the-counter market, the dollar was at CNY6.3733 around 0830 GMT, up from CNY6.3686 late Wednesday. It traded in a range of CNY6.3682 to CNY6.3746.
The People's Bank of China set the dollar/yuan central parity rate at 6.3215, slightly higher than Wednesday's 6.3209, following the greenback's strength against the euro overnight.
"The gain in the dollar/yuan pair was the result of the euro sinking to a new two-year low yesterday night and the dollar gaining further this afternoon," said a Beijing-based trader with a local bank.
The single currency fell to a fresh two-year low against the dollar Wednesday after the Fed minutes failed to give investors a clear sign that the central bank would undertake further easing.
"However, overall, the Chinese central bank has tried to keep the pair stable as the fixing was only slightly adjusted," the Beijing-based trader said.
Traders said the dollar/yuan pair will likely remain stable in the short term. Most of them expect the dollar to consolidate in a range of CNY6.3600-CNY6.3700.
"Investors are not sure whether China's economic growth could rebound in the third quarter given the ongoing European debt crisis, so they're more willing to hold the dollar," said a Shanghai-based trader at a local bank.
China's economy grew 8.1% in the first quarter, the slowest quarterly expansion in three years. Recent economic data, including consumer inflation and imports, have showed domestic demand continued to worsen in the second quarter.
Economists widely expect China's economy in the second quarter to have expanded at its slowest pace since the first quarter of 2009. China is scheduled to release gross domestic product data on Friday.
Offshore, one-year dollar/yuan nondeliverable forward contracts rose to 6.4180/6.4280 from 6.4145/6.4175 late Wednesday, implying a 0.7% fall by the yuan over the next year.
In the offshore yuan market in Hong Kong, where the Chinese currency floats freely, the dollar was at CNY6.3695, up from CNY6.3635 late Wednesday.
