The offshore yuan lingered near an almost one-month low on Tuesday while safe-haven currencies including the dollar benefited as investors sought shelter from a potential default by property developer China Evergrande.
Commodity currencies gained amid a rally in crude oil prices, with the Canadian dollar getting an additional boost from a projected election victory for the country’s ruling party.
The yuan edged up about 0.1% to 6.4765 per dollar after weakening as far as 6.4879 on Monday, its lowest since Aug. 23. Mainland markets are shut for a public holiday.
Analysts at Wells Fargo expect the yuan to soften to 6.60 per dollar in the next month, its weakest since November.
The U.S. currency had already been rising on expectations the Federal Reserve will signal a start to stimulus tapering at a two-day policy meeting that ends Wednesday.
The dollar index, which measures the currency against six major peers, was largely unchanged at 93.176 after rising overnight to 93.455 for the first time since Aug. 23.
The greenback was mostly flat at $1.17325 per euro after gaining to $1.1700 overnight, a first since Aug. 23.
The Bank of Japan decides policy on Wednesday, with no change expected to its massive stimulus programme.
South African rand firms in uncertain trade
The South African rand gained ground in early Tuesday trade amid hopes the fallout from Chinese property firm Evergrande’s debt debacle might be contained.
AT 0650 GMT, the rand was trading at 14.6800 against the dollar, 0.58% stronger than its previous close.
· U.S. Treasury yields down amid market sell-off in equities
U.S. government debt prices were higher on Tuesday morning as investors navigated a market sell-off in equities and awaited for details from the Federal Reserve.
At around 1:30 a.m. ET, the yield on the benchmark 10-year Treasury note dropped 17 basis points to trade at 1.3220% and the yield on the 30-year Treasury bond fell 15 basis points to trade at 1.8625%. Yields move inversely to prices.
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