Thu, 17 Oct 04:08:00 GMT
By Saikat Chatterjee
HONG KONG, Oct 17 (Reuters) - China’s yuan rose within sight of a fresh record high on Thursday as Asian markets rallied after U.S. lawmakers produced a last-minute deal to avert a potentially catastrophic debt default.
The U.S. Congress on Wednesday approved a deal to end a partial government shutdown and pull the world’s biggest economy back from the brink of a historic debt default that could have threatened financial calamity. [ID:nL1N0I604P]
With a default out of the way, investors went back to focusing on an important policy meeting in November in China where more financial sector reforms are expected to be unveiled, including some on currency markets.
By midday, the Chinese yuan rose to an intraday high of 6.0968 per dollar, a whisker away from a record 6.0965 hit in intraday trades on Wednesday. It ended the previous session at 6.1025 per dollar.
This week's rally in the Chinese yuan in the onshore spot market has upended positions in the offshore market, particularly in the offshore yuan market traded in Hong Kong, indicating that market participants were little prepared for more gains after a solid performance since June.
Spot yuan in Hong Kong stabilised near a record 6.09 per dollar while three-month yuan non-deliverable forwards looked poised for more gains on bank bids.
The onshore spot yuan market at a glance:
Item Current Previou Change
PBOC midpoint 6.1431 6.1408 -0.04%
Spot yuan 6.0974 6.1025 0.08%
Divergence from midpoint* -0.74%
Spot change ytd 2.18%
Spot change since 2005 revaluation 35.74%
*Divergence of the dollar/yuan exchange rate. Negative number indicates that spot yuan is trading stronger than the midpoint. The People's Bank of China (PBOC) allows the exchange rate to rise or fall 1 percent from official midpoint rate it sets each morning.
OFFSHORE CNH MARKET
The offshore yuan market at a glance:
Instrument Current Difference from onshore
Offshore spot yuan 6.0977 0.00%
Offshore non-deliverable 6.156 -0.21%
*Premium for offshore spot over onshore
**Figure reflects difference from PBOC's official midpoint, since non-deliverable forwards are settled against the midpoint. .
KEY DATA POINTS
- Gap between PBOC midpoint and spot rate is narrowing. GRAPHIC: http://link.reuters.com/qyx74t
- China's trade surpluses mainly driven by weak imports rather than strong exports. GRAPHIC: http://link.reuters.com/qav68s
- Corporate FX purchases in May show reduction in yuan appreciation expectations. GRAPHIC: http://link.reuters.com/tyx74t
- Hot money inflows turn to outflows in May GRAPHIC: http://link.reuters.com/saz74t
- Despite relatively stable dollar/yuan exchange rate, the yuan is appreciating on a trade-weighted basis. GRAPHIC: http://link.reuters.com/sed74t
(Editing by Kim Coghill)