Business Recorder
HONG KONG: China’s yuan weakened against the dollar on Monday, as the greenback continued to benefit from safe-haven demand after high-stakes US-Iran peace talks ended without agreement. The yuan weakened as far as 6.8380 against the US dollar, before last trading 0.05% weaker on the day at 6.8340. Its offshore counterpart traded at 6.8323 yuan per dollar , down about 0.09%. Risk-off trades dominated the markets again on Monday as the US military said it would begin a blockade of all maritime traffic entering and exiting Iranian ports and coastal areas. The US currency advanced broadly in early Asian trade. The dollar index held steady above 99, near its highest level in a week. Oil prices also surged, with Brent crude futures jumping more than 7% to above $100 a barrel. “The yuan is moving pretty much in sync with the dollar index right now,” analysts at Nanhua Futures said in a note. Simmering US-Iran tensions might give the greenback a short-term bounce that pressures the yuan, but the People’s Bank of China (PBOC) has been signalling its preference to keep the yuan steady, they added. Prior to the market opening, the PBOC set the midpoint rate at 6.8657 per dollar, near the three-year high seen last week, but 262 pips weaker than a Reuters’ estimate. The spot yuan is allowed to trade 2% either side of the fixed midpoint each day. “We think the CNY could emerge as one of the more insulated Asia currencies as the Middle East conflict drags on … while Chinese exporters’ USD selling flows continue to provide some tailwind for the currency,” analysts at Barclays said in a research note.
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