China’s renminbi firmed on Monday in its first day of trading after the week-long Lunar New Year holiday, buoyed by the dollar’s recent dollar and a stronger central bank midpoint.
The People’s Bank of China (PBoC) set the midpoint rate at 6.5118 per dollar prior to the market open, the highest fixing in over a month, or 0.3 percent firmer than the previous fix of 6.5314, Reuters reported.
The spot market opened at 6.5300 per dollar and hit an intraday high of 6.4988 in late morning trade.
It trimmed some gains and was changing hands at 6.5020 at midday, strengthening 1.1 percent from the previous close.
PBoC governor Zhou Xiaochuan said over the weekend the yuan exchange reform would help the market be more flexible in dealing with speculative forces betting on yuan depreciation.
Zhou commented there was no basis for the yuan to keep falling, and China would keep it stable versus a basket of currencies while allowing greater volatility against the US dollar.
“The message from the governor really soothed the market sentiment,” said a trader at a local commercial bank.
“We expect the yuan’s value to stay in line with central bank’s fixing in the near future,” he added.
The offshore renminbi was trading 0.04 percent weaker than the onshore spot at 6.5045 per dollar.
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