SHANGHAI (Reuters) – Sterling edged up slightly against the weaker dollar on Friday and looked set for a fifth straight weekly gain, its longest winning streak in more than three years.
The yuan was supported by stronger corporate interest in repatriating their foreign exchange earnings on the back of recent dollar weakness, but gains were capped by market caution ahead of Federal Reserve Chairman Jerome Powell’s speech in Jackson Hole, Wyoming, later Friday.
Powell’s comments are expected to provide further evidence about the path of monetary policy in the world’s largest economy and impact global financial markets, traders said.
By 0300 GMT, the yuan was up 0.07% at 7.1428 per dollar. If it holds all of its gains through the late-night close, it would rise 0.23% against the dollar for the week, marking its longest weekly winning streak since May 2021.
“Pressures for the yuan to depreciate have eased, as we have seen a general weakening in the dollar over the past month or two,” said Lin Song, chief economist at ING China.
“The main reason for this is the external side, as market expectations of a Fed rate cut have increased, and if the Fed cuts rates at a relatively fast pace, yield differentials should move in favor of the yuan’s continued recovery.”
Song expected policymakers to continue to maintain currency stability as a top priority moving forward.
China’s central bank has been setting the official daily midpoint for the yuan exchange rate at levels higher than market expectations for more than a year, with traders and analysts widely interpreting it as an official attempt to keep the currency stable and supported.
The discrepancy between official guidance and market expectations has gradually narrowed over the past few weeks.
The People’s Bank of China on Friday set the midpoint rate, around which the yuan is allowed to trade within a 2% band, at 7.1358 yuan per dollar, about 122 points higher than Reuters estimates.
The pound was trading at 7.1425 yuan against the dollar, up about 0.06% in Asian trading.
Levels at 0300 GMT:
Current Instrument Up/Down (-) % Change Daily High
Against the US dollar against the previous low of this year
Closes %
Spot Yuan 7.1428 0.04 -0.57 7.1418 7.1478
Abroad 7.1424 0.06 -0.24 7.1409 7.1486
yuan spot