Source: NetEase,
ChinaScope Financial (Data)
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The
USD/CNY spot rate once again hit the daily upper limit of 6.2277 during today’s
intraday hours. This is the 17th such occurrence in the recent 19 trading days,
with only November 16 and November 21 not seeing the spot rate reach its upper
limit. The People’s Bank of China today set the USD/CNY central parity rate at
6.2906, 12 basis points stronger than the 6.2918 of the previous trading day.
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The
excess liquidity caused by quantitative easing in the world’s major economies
and stronger investor confidence in China’s economic rebound have weighed
heavily on RMB appreciation. Meanwhile, the PBOC has also reduced market
intervention and strengthened the role of the market in the determining of
exchange rates. This will not only promote China’s market-oriented exchange
rate reforms, but also help improve the structure of Chinese foreign exchange
reserves.
The yuan has hit the upper limit of its trading span against
the US dollar 17 times over the last 19 trading days, possibly reflecting
increased investor confidence in the Chinese economy. That market forces are
allowed to play a bigger role in deciding the yuan value is seen as an
important step towards greater internationalization of the Chinese currency.
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