DM Monitoring
LONDON: The dollar fell against a basket of major currencies on Tuesday after China lifted its official yuan exchange rate by its highest margin since it abandoned a dollar peg in 2005, helping support demand for other currencies. China’s central bank set the official yuan midpoint at 6.4760 per dollar before the market opened, up 1% from the previous fix, the biggest change higher since 2005.
In the offshore market, the yuan strengthened as far as 6.4419 for the first time since June 2018. It started the week at 6.4944.
“Following through yesterday’s move and in keeping with the weaker dollar theme, dollar-yuan continues to slide, blasting through 6.44 and pushing toward 6.42,” said Eleanor Creagh, Australian market strategist at Saxo Bank.
“The stronger yuan fix is doing little to push back on bullish yuan traders, along with news the New York Stock Exchange is scrapping delisting plans for Chinese Telcos.”
The New York Stock Exchange said it no longer intends to de-list three Chinese telecom companies. The surprising reversal of an announcement made only last week deepened confusion over a U.S. crackdown on companies said to be linked to China’s military.
While investor caution about the yuan’s rally prompted some later selling of the Chinese currency on Tuesday, the central bank’s action nonetheless lifted risk sentiment in currency markets.
Among G10 currencies, the Australian dollar led gains as the move by the People’s Bank of China encouraged broad dollar selling.
