BEIJING: China’s yuan traded at its strongest in a week against the US dollar as the greenback softened before US Federal Reserve issues a statement later on Wednesday which may give a hint on the timing of an interest rate increase this year.
The onshore yuan traded at 6.2051 at 10 am Wednesday morning, up 34 basis points from its Tuesday close and at its strongest level since June 9.
The yuan moved despite the People’s Bank of China setting the mid-point slightly weaker at 6.1158 on Wednesday, down three basis points from Tuesday. Traders could trade two per cent above or below the mid-point.
The offshore yuan also trade at its strongest in week at 6.2074.
Jasper Lo Cho-yan, the marketing director of Tung Shing Futures, said recent weakness in the stock markets in Shanghai and Shenzhen benefited yuan trading.
The US currency has also been soft against the other currencies.
“If the US would decide to increase the interest rate soon and the Greece debt crisis would not be able to find a solution, it would be very bad news for the euro’s outlook. It would also be bad news for the New Zealand dollar which has dropped to the weakest in 5 years as a result of its central bank rate cut,” Lo said.
An interest rate rise would help US dollar strengthen in the following months, he said.
