Yahoo Finance Yuan Rises; Strong Daily Fix, Chinese Government Support in Focus
Investing.com - The Chinese yuan rose against the U.S. dollar on Tuesday in Asia as China set the currency’s daily fix at a stronger-than-expected rate. Reports of funding support from the Chinese government were also in focus.
The USD/CNY pair was down 0.2% to 6.9149 by 11:15 PM ET (03:15 GMT).
The People’s Bank of China set its reference rate at 6.8930 per dollar, higher than the expected 6.9089.
The central bank also said it plans to sell bills in Hong Kong later this month, a move that will drain liquidity and support the currency.
The gains in the currency also came after state-owned news agency Xinhua cited a cabinet document and said local governments should use proceeds from special bonds to invest in major projects including highways, gas and power supply and railways.
That would help “increase effective investment, improve economic structure, stabilise aggregate demand and maintain sustained and healthy economic development”, Xinhua said.
“On the basis of increasing the size of special bonds by a big margin, we should strengthen macro-policy coordination and maintain reasonable and sufficient market liquidity.”
Traders will be closely monitoring an expected meeting between U.S. President Donald Trump and his Chinese counterpart Xi Jinping at the G-20 summit in Japan later this month.
On Monday, Trump threatened that Washington would slap more tariffs on Chinese goods if his Chinese counter Xi Jinping does not attend the upcoming G-20 meeting.
The safe-haven yen was down 0.1% against the dollar as risk sentiment was boosted after the U.S. and Mexico struck a migration deal late last week to avert a tariff war.
The U.S. dollar index that tracks the greenback against a basket of other currencies was little changed at 96.743.
The AUD/USD and the NZD/USD pair both slipped 0.1%.
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