China's yuan pulls back after officials warn against speculation
The yuan hit a three-year high against the dollar on Monday before falling back following a chorus of warnings from Chinese officials against speculative bets on the currency.
A former senior official at the foreign exchange regulator joined a slew of current and former officials on Monday cautioning against one way bets on the yuan, which has seen a two-month long rally against the dollar. In a commentary in the official China Securities Journal, Guan Tao warned against herd behaviour that could harm market order and weigh on China’s exporters.
Guan’s comments echoed those of a former central bank official, who said on the weekend that the yuan’s rise is not sustainable, and followed a warning by the central bank-backed Financial News of factors that could lead it to weaken against the dollar. Regulators said last week they would crack down on forex market manipulation, while leaving currency policy unchanged.
The People’s Bank of China (PBOC) has also given implicit approval for a strong yuan through its midpoint - spot yuan can trade 2% either side of the daily fixing. On Monday, it lifted the midpoint to 6.3682 per dollar, the strongest since May 17, 2018.
Spot yuan rose to a top of 6.3607 per dollar on Monday, its strongest since May 18, 2018, but later changed direction to trade slightly weaker at 6.3689.
Offshore yuan strengthened to 6.3555 per dollar, its firmest since May 23, 2018 before weakening to 6.3656.
Reference: Reuters
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