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The dollar eased in global trade against most of its major peers while sharp rebounds in both mainland and Hong Kong stocks bolstered appetite for the Chinese currency. [.SS]
The onshore yuan reversed earlier losses in afternoon spot trade, surging to a high of 7.2577 before trading at 7.2751 as of 0633 GMT, up about 0.4% on the day.
Earlier in the session, the People’s Bank of China (PBOC) set the midpoint rate at 7.2081 per dollar, the lowest since Jan. 24, 2008, or 0.43% weaker than the previous fix of 7.1768.
Currency traders took the breach of the key 7.2 per dollar level in the central bank fixing as a sign authorities were comfortable with further weakness.
As a result, the onshore yuan opened at 7.3201 per dollar and quickly touched 7.3280, the lowest since Dec. 26, 2007.
However, those losses were reversed in afternoon trade as the U.S. dollar sank from a one-week top against a basket of major peers, as investors weighed the odds of a less aggressive Federal Reserve at Wednesday’s monetary policy meeting. [FRX/]
(Rapid fall of the yuan https://graphics.reuters.com/CHINA-YUAN/klvygebonvg/chart.png)
The Fed’s aggressive monetary tightening has supported the greenback and U.S. yields in recent months, and fresh clues on the future pace of rate hikes could affect other major currencies.
Separately, foreign investors turned net buyers in China’s onshore yuan-denominated bond market in October, a person close to the foreign exchange regulator said, after eight straight months of outflows.
