China's yuan off 1-week high, dollar demand weighs
China's yuan eased off one-week highs against the dollar hit in the previous session, as renewed concerns over U.S.-China relations and doubts about the Chinese currency's recent strength prompted some investors to buy dollars.
Prior to market opening, the People's Bank of China (PBOC) set the midpoint at 6.4497 per dollar, 69 pips firmer than the previous fix of 6.4566, the strongest since June 18.
In the spot market, onshore yuan opened at 6.4500 per dollar and was changing hands at 6.4529 at midday, 89 pips weaker than the previous late session close. The spot yuan surged to a high of 6.4363 on Friday, the firmest since Sept. 3.
The yuan has mostly traded between 6.45 and 6.5 per dollar over the past three months, but traders said a breach of the psychologically critical 6.45 threshold in the midpoint and spot rate prompted dollar purchases from corporate clients and banks' proprietary accounts.
The yuan gained last week buoyed by signs of willingness to get U.S.-China relations back on track after President Joe Biden and President Xi Jinping discussed the need to manage competition between their countries and avoid conflict.
But some traders said it remained too early to decide if gains in the yuan would be sustainable.
Reference: Reuters
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