FX.co ★ Offshore Yuan Rebounds on PBoC Fixing

The offshore yuan appreciated to approximately 7.13 against the dollar on Thursday, recovering some of the substantial losses from the previous session. This rebound was influenced by the People’s Bank of China setting a stronger daily reference rate than anticipated. Before market opening, the central bank established the reference rate at 7.1118 per dollar, surpassing the Reuters prediction of 7.1293. Additionally, market sentiment was bolstered by indications of easing trade tensions between the United States and China, notwithstanding comments from the US Ambassador to China, David Perdue, suggesting that a much-anticipated meeting between President Donald Trump and President Xi Jinping is more likely to be postponed to next year, rather than taking place this fall. Concurrently, the PBoC infused CNY 600 billion into financial institutions through its one-year Medium-Term Lending Facility to sustain sufficient liquidity within the banking system. With CNY 300 billion in MLF funds maturing this month, this operation culminated in a net liquidity infusion of CNY 300 billion, marking the seventh consecutive month of net MLF growth.