Forex Comment Jan 28

Momentum of rising yuan weakens  

Onshore RMB to USD fell more than 200 points at the opening on Thursday

Momentum of rising yuan weakens
The yuan rose 180 basis points on Wednesday January 27, but was subdued on Thursday. Image: AFP.

(ATF) On January 28, the onshore yuan exchange rate against the US dollar fell more than 200 points at the opening to 6.4900.

At the same time, the offshore renminbi/yuan fell below the 6.51 mark against the US dollar, reaching a minimum of 6.5147 according to Shanghai Securities News. 

As of 9.32am, the onshore and offshore yuan were quoted at 6.4916 and 6.5053 against the US dollar, respectively.

Meanwhile, central parity of the yuan against the US dollar was reduced by 180 basis points from the previous trading day to 6.4845.

The paper believed that in the yuan market, after the dollar index stabilised, the momentum for appreciation of the yuan exchange rate has weakened.

In addition, the daily average outflow of funds from Hong Kong stocks this year under Southbound Stock Connect has reached 12.8 billion yuan. If the outflow of funds from the south is superimposed on changes in risk appetite, it may trigger pressure to adjust the yuan exchange rate.

This deflates confidence from the day before when yuan appreciated 182 basis points.

The yuan exchange rate has been below the psychological point of 6.5 for many days – since January 5. The RMB has appreciated sharply has for more than half a year, but that has brought greater cost pressures on exporting companies.

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