WSJ:China Yuan Up Sharply Late on Onshore Euro Selling
Vs Parity Previous
USD/CNY Central Parity 6.3320 6.3303
USD/CNY OTC 0830 GMT 6.3627 +0.48% 6.3794
High 6.3812 +0.78%
Low 6.3572 +0.40%
SHANGHAI--China's yuan rose sharply against the U.S. dollar late Tuesday on heavy yuan buying from large corporates during the last trading session of July, despite the central bank guiding it weaker via its daily reference rate.
On the over-the-counter market, the dollar was at CNY6.3627 around 0830 GMT, much lower than Monday's close of CNY6.3794. It traded in a range of CNY6.3572 to CNY6.3812.
Traders said a local bank sold a substantial amount of euros on behalf of a large oil company in the afternoon, intensifying the already heavy month-end selling of foreign currencies.
Those euros were sold for dollars, which were in turn sold for yuan in the absence of direct trading onshore between the euro and the yuan.
"Corporate euro-selling had been mostly priced in today, so tomorrow the yuan should weaken a bit toward its day-earlier level," said a Shanghai-based trader at a local bank, who expects the dollar to return above CNY6.3700 Wednesday.
The People's Bank of China set the dollar/yuan central parity rate at 6.3320, higher than Monday's 6.3303, following euro weakness; the dollar then rose to as high as CNY6.3812.
The yuan comeback narrowed its year-to-date loss against the dollar to 1.1%.
Offshore, one-year dollar/yuan nondeliverable forward contracts fell to 6.4275/6.4325 from 6.4340/6.4370 late Monday, implying a 1.1% fall by the yuan over the next year.
But in the offshore yuan market in Hong Kong, where the Chinese currency floats freely, the dollar rose to CNY6.3845 from CNY6.3835 late Monday, extending its gap with its onshore counterpart as the offshore investors become more pessimistic toward the yuan.
