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Emirates 24/7
24-02-2025
- Business
- Emirates 24/7
China's Yuan Hits Three-Month Highs Amid Dollar Weakness and Stock Market Gains
China's yuan strengthened to fresh three-month highs against the U.S. dollar on Monday, driven by strong domestic equity market performance and broader dollar weakness. Policymakers are expected to prioritize currency stability ahead of next week's National People's Congress (NPC) meeting, analysts at Barclays noted. They added that inflation targets and fiscal support measures will be key topics to watch. By midday, the onshore yuan rose 0.3% to 7.2313 per dollar, its highest level since November 29, 2024. Meanwhile, the offshore yuan gained 0.36% in Asian trade, reaching 7.2304 per dollar. The Chinese currency has now strengthened for four consecutive days, supported by an AI-driven rebound in domestic stock markets and the recent decline in the greenback. This momentum has helped the yuan gain 0.3% against the dollar this month and 0.9% year-to-date, recovering from multi-year lows of 7.33 in January. Before the market opened, the People's Bank of China set the midpoint rate at 7.1717 per dollar. Since mid-November, the central bank has consistently set its official guidance stronger than market expectations, a move analysts interpret as an effort to curb the yuan's depreciation. In the bond market, Chinese 10-year government bond yields rose 3.6 basis points to 1.78%, while the yield on comparable U.S. Treasury bonds fell to 4.4%. The U.S. dollar index, which measures the greenback against a basket of six major currencies, declined 0.3% to 106.16—its lowest level since December—following a Wall Street sell-off and weaker economic data. Key Onshore vs. Offshore Levels: Overnight dollar/yuan swap: Onshore -8.70 pips | Offshore -8.70 pips. Three-month SHIBOR: 1.8% | Three-month CNH HIBOR: 2.5% Instrument Current % Change Day's High Day's Low Previous Close YTD Change (%) Spot yuan 7.2313 +0.3% 7.2278 7.2517 7.2313 +0.9% Offshore yuan 7.2304 +0.36% 7.2264 7.2542 7.2304 +1.46% Follow Emirates 24|7 on Google News.
South China Morning Post
07-02-2025
- Business
- South China Morning Post
HKMA to launch US$13.7 billion facility to support yuan-settled global trade
The Hong Kong Monetary Authority (HKMA) said it would launch a 100 billion yuan (US$13.7 billion) funding facility at the end of February to support international trade settled in China's currency. To meet growing demand for use of the Chinese currency in trade finance and strengthen Hong Kong's position as the world's premier offshore yuan hub, the HKMA said it would unveil the RMB Trade Financing Liquidity Facility on February 28, according to a statement on Friday. The HKMA said the facility would provide yuan funding to banks for trade finance using the onshore interest rate – the Shanghai Interbank Offered Rate (SHIBOR), which is typically lower than the offshore rate – plus a premium of a quarter of a percentage point. The available tenors are one, three or six months, which are longer than the HKMA's existing yuan liquidity facilities, which cover tenors of up to a week. The facility was expected to provide 'participating banks with access to a stable source of funds at a lower cost, which should make it easier for [companies] to obtain RMB trade finance from banks at lower interest rates', the HKMA said. The facility can be used to provide yuan financing to overseas and local companies. The HKMA would adopt a phased approach to allocating quotas to banks and has invited them to register their interest in the programme, along with their desired quotas. It said it would engage with banks in the next two to three weeks. The use of the yuan for international trade settlement has become more popular as companies seek cost efficiencies and supply chain diversification amid US-China tensions, top financiers have said in recent interviews.
