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SHANGHAI, Dec 8 (Reuters) – China’s yuan firmed on Monday, supported by stronger-than-expected exports and signs of easing trade tensions, as investors awaited policy signals from key year-end meetings.
Outbound shipments from the world’s second-biggest economy grew 5.9% year-on-year, customs data showed on Monday, reversing from a 1.1% contraction in October and beating a 3.8% forecast in a Reuters poll.
The spot yuan opened at 7.0683 per dollar and was last trading at 7.07 as of 0247 GMT, 20 pips firmer than the previous late-session close.
Prior to the market opening, the People’s Bank of China set the midpoint rate at 7.0764 per dollar, weaker than the Reuters estimate for an eighth consecutive session, but the deviation has narrowed to only 17 pips from a peak of 180 pips last week.
The spot yuan is allowed to trade a maximum of 2% either side of the fixed midpoint each day.
The daily yuan fixing serves a dual role: acting as a stabiliser to curb sharp swings regardless of market pressures, and, during times of geopolitical tension, providing an anchor for domestic market sentiment, said Maybank analysts.
Signs of easing trade strains also underpinned the currency.
Senior Chinese and U.S. officials held a call on Friday to discuss trade ties, including steps to implement an agreement aimed at defusing their long-running trade dispute.
Investors are now focused on China’s annual Central Economic Work Conference and a Politburo meeting later this month for clues on next year’s growth targets.
We expect policymakers to express greater concern about growth challenges, particularly from the property sector, and to emphasise easing measures aimed at boosting domestic demand and stabilising growth, Goldman Sachs analysts said in a note.
The dollar index, which measures the dollar against a basket of six peers, was 0.116% lower at 98.9.
The offshore yuan traded at 7.0685 yuan per dollar, up about 0.01% in Asian trade.
LEVELS AT 0247 GMT
INSTRUMENT CURRENT UP/DOWN( % CHANGE DAY’S DAY’S
vs USD -) VS.
YR-TO-DAT HIGH LOW
PREVIOUS E
CLOSE %
Spot yuan 7.07 0.01 3.24 7.067 7.0706
Offshore 7.0684 0.01 3.79 7.0649 7.0697
yuan spot
(Reporting by Shanghai Newsroom; Editing by Muralikumar Anantharaman)
