SHANGHAI: China’s yuan held steady against the dollar on Friday but remained on course for a fourth consecutive weekly rise, as a sharp selloff in the share market weighed on investor sentiment.
Investors also stayed cautious ahead of major central bank meetings next week, with the Federal Reserve, Bank of Japan and European Central Bank widely expected to keep rates unchanged while maintaining a hawkish tone. Attention will also turn to China’s fifth plenum for fresh policy clues.
Prior to the market opening, the People’s Bank of China (PBOC) set the midpoint rate at 6.7180 per dollar, its strongest since February 2, 2023 and 422 pips weaker than a Reuters’ estimate of 6.6758.
The spot yuan is allowed to trade 2% either side of the fixed midpoint each day.
In the spot market, the onshore yuan was 0.03% higher at 6.6725 per dollar as of 0304 GMT, not far from a more-than-four-year high of 6.6712 hit a day earlier.
If the yuan finishes the late-night session at the midday level, it would have strengthened 0.2% to the dollar for the week, logging the fourth consecutive weekly rise for a year-to-date gain of 4.8%.
The offshore yuan last fetched 6.6724 per dollar, up about 0.01% in Asian trade.
Onshore yuan traded in a tight range of less than 20 pips in morning deals, currency traders said, with the recent selloff in mainland equities dampening market sentiment.
They added that investors will closely monitor the upcoming Fed policy meeting and comments for the trajectory of US monetary policy, which could affect global financial markets.
A Reuters poll showed that the Fed will skip raising interest rates this month and deliver a hike in December, as policymakers signal patience even as stubborn inflation argues for a tougher response.
Separately, much of the market attention will be switched to China’s fifth plenum, scheduled for October 26-29.
“The focus will likely be political rather than economic, but markets will scrutinise the communiqué for new signals,” said Lynn Song, chief economist for Greater China at ING.