Yuan Gains as PBOC Increases Reference Rate at Daily Fix
- USDCNH falls more than 0.2 percent in morning trade
- PBOC strengthens the Yuan reference rate by 0.05 percent
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The Chinese Yuan climbed more than 0.2 percent versus its US counterpart (USDCNH) in morning trade Friday. The movement higher came after the People’s Bank of China (PBOC) increased the reference rate for the first time since the central bank implemented a new fixing policy. The increase was by 0.05 percent which brought the Yuan reference rate to 6.3975 against the US Dollar. Thursday’s fix was a 1.1 percent reduction with the USDCNH rising more than 0.4 percent.
Yesterday the PBOC announced that the Yuan exchange rate adjustment is almost complete. Indeed the central bank followed through with this. By far, today’s fix was the least dramatic as the previous 3 were a cut by more than a full percentage point. Looking at overnight S&P 500 trade (in CFDs and futures), the index climbed more than 0.1 percent after the announcement. It appears the market’s response to China’s new policy continues to taper.
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