HALISTER1: INSIDE CHINA: Yuan Hits Multi-Week High as Asian Currencies Rise

INSIDE CHINA: Yuan Hits Multi-Week High as Asian Currencies Rise

(Bloomberg) -- Onshore and offshore yuan both strengthen along with other Asian currencies after FOMC meeting appeared to signal no great rush for Fed rate hike.
  • Onshore yuan gains 0.14% to 6.6607 per dollar, highest since July 4
  • Offshore yuan up 0.09% at 6.6656, strongest since July 1
  • PBOC strengthened CNY reference rate for third straight day, by 0.11% to 6.6597
  • Dollar Index down 0.37%, heading lower for fourth day
  • Yuan to rise today on supportive sentiment as Sept. Fed hike isn’t likely, Mizuho Bank Asian FX strategist Ken Cheung says
    • Could be short-lived, as BOJ may not deliver expected easing at Friday’s policy meeting; could trigger USD/JPY slide and risk aversion; July risk rally has been based on expectations of global easing
    • USD/CNY to remain stable below 6.70 near term; PBOC’s intention to stabilize yuan has cooled market expectations for further depreciation
  • Yuan still in line with fundamentals despite depreciation: IMF
  • With Fed hike less likely before Dec., EM Asian currencies will benefit in coming weeks from accommodative external liquidity, reflationary policies and steadier market sentiment, Scotiabank Asia FX strategist Gao Qi writes in note today
    • But risk-taking sentiment to remain vulnerable, particularly approaching Yellen’s Aug. 26 speech
  • Bank regulator said to plan tighter rules on wealth- management products, a person familiar with the matter said yesterday
    • Tigher WMP regulations would boost to China bonds, analysts say
  • Yield of 2.9% May 2026 govt bond falls 2 bps to 2.790%
  • CNY 7-day repo rate declines for second day, by 15.4 bps to 2.2509%, lowest since July 20
  • China to cut VAT tax for financial companies, ensure financing for small businesses: China National Radio
  • Small lending companies’ yuan loans fell 4b yuan in 1H: PBOC
  • World Bank and China Development Bank said to plan issue of SDR notes; seen supporting growing global role of yuan
  • ICBC Asia said to issue SDR-denominated bonds: Economic Information Daily
Alert: HALISTER1
Source: BFW (Bloomberg First Word)

People
Ken Cheung (Mizuho Financial Group Inc)
Qi Gao (Bank of Nova Scotia Asia Ltd/Singapore)

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