WSJ:China Yuan Down Late on Corporate Dollar Demand; Ignores Fixing
Vs Parity Previous
USD/CNY Central Parity 6.3126 6.3140
USD/CNY OTC 0830 GMT 6.3734 +0.96% 6.3702
High 6.3743 +0.98%
Low 6.3689 +0.89%
SHANGHAI--China's yuan fell against the U.S. dollar late Thursday on corporates' dollar buying in the afternoon despite the central bank's efforts to guide the Chinese yuan higher.
On the over-the-counter market, the dollar was at CNY6.3734 around 0830 GMT, higher than Wednesday's close of CNY6.3702. It traded in a range of CNY6.3689 to CNY6.3743.
The People's Bank of China set the dollar/yuan central parity rate at 6.3126, lower than Wednesday's 6.3140, following mild dollar weakness overseas. The ICE Dollar Index, which tracks the dollar against a trade-weighted basket of currencies, was at 82.966 late Wednesday in New York, lower than 82.985 late Tuesday. At 0900 GMT, the index was at 82.986.
However, corporates' dollar buying in the afternoon pushed the currency pair extremely close to the daily upper limit. The pair rose as high as 0.98% from the fixing. The central bank only allows the dollar/yuan rate to move no more than 1.0% above or below the central parity rate.
Traders said the surge in dollar buying is unlikely to persist Friday.
"It's difficult to understand why some investors want to buy the dollar now. It's not a very good timing to buy onshore as it's at a relatively high level these days," said a Beijing-based trader with a major local bank.
The yuan has fallen 1.3% since the start of 2012.
Offshore, one-year dollar/yuan non deliverable forward contracts are at 6.4140/6.4190 from 6.4150/6.4180 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 late Thursday, lower than CNY6.3730 late Wednesday.
