HONG KONG: China’s yuan traded in a narrow range on Wednesday after briefly hitting its highest in more than four years, supported by robust export growth and a broadly weaker dollar.
The greenback remained subdued after falling to a three-week low in the previous session, with lower Treasury yields and weaker oil prices reducing the currency’s appeal.
The yuan touched 6.6765 per dollar in morning trade, its strongest level since June 28, 2022, before easing slightly to 6.6791 as of 0250 GMT.
China’s third quarter economic growth beat expectations as roaring exports offset consumers’ tight grip on their wallets.
Domestic economic resilience, capital inflows, and rising corporate demand to convert forex earnings into yuan, have combined to reinforced yuan’s upward trend, Caitong Securities analysts said in a note.
“The appreciation pace may slow down going forward” as geopolitical uncertainties could provide support to the dollar and marginally dampen capital inflows, they added.
Goldman Sachs estimated China attracted net forex inflows of $50 billion in September, with the FX conversion ratio edging up to 66% from 63% the previous month.
The yuan is up 0.4% against the dollar this month, and 4.7% firmer this year.
The central bank has gradually allowed the daily midpoint to strengthen alongside the yuan’s rise.
Prior to the market opening, the People’s Bank of China set the midpoint rate at 6.7192 per dollar, its strongest since February 2, 2023 and 413 pips weaker than a Reuters’ estimate. The spot yuan is allowed to trade 2% either side of the fixed midpoint each day.
The offshore yuan traded at 6.6786 yuan per dollar, down about 0.05%.