Yuan Fixing Today May Be Sign China Is Wary of Slump, RBC Says
(Bloomberg) -- China’s yuan fixing on Tuesday gave a hint that the nation’s authorities may be growing concerned about the pace of the currency’s decline, according to Royal Bank of Canada.
The yuan’s reference rate was set at 6.518 per dollar Tuesday morning, a level that was slightly stronger than the 6.5210 average forecast of 19 traders and analysts in a Bloomberg survey. While within the range of projections, and only about 0.05 percent off, the differential means investors should watch out for more aggressive fixings in coming days, said Sue Trinh, head of Asia FX strategy at RBC Capital Markets in Hong Kong.
“This could indicate that China thinks we’ve seen enough CNY depreciation for the time being,” Trinh wrote in a note Tuesday, referring to the onshore yuan. Measured against a replica of the basket of currencies used by the China Foreign Exchange Trade System to manage the yuan, it has dropped 1.6 percent on a monthly basis -- “a two-standard deviation event, where China has historically stepped in to stop the rot," she wrote.
The Bloomberg replica of the CFETS RMB Index, which tracks the yuan against 24 currencies, has dropped 1.6 percent in the past week. The yuan is down 1 percent against the dollar in that period, reaching 6.5574 per dollar Tuesday, the weakest since December.
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