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[HONG KONG] China's yuan firmed against the US dollar on Wednesday as the global dollar index sank with Republican Donald Trump edging ahead in the US presidential election.
Traders say the yuan market is closely following the move of the US dollar and they are seeking to control risks.
The People's Bank of China set the midpoint rate at 6.7832 yuan per US dollar prior to market open, weaker than the previous fix at 6.7817 yuan.
The spot market opened at 6.7846 yuan per US dollar and was changing hands at 6.7711 at midday, putting the yuan 127 pips stronger than the previous late session close and 0.18 per cent stronger than the midpoint.
The spot rate is currently allowed to trade with a range 2 per cent above or below the official fixing on any given day.
"The yuan market closely tracked the dollar movement this morning and will continue to be volatile till the election result comes out," said a trader at a big Chinese bank in Beijing.
"So we managed our positions very carefully to control risks," the trader said.
The Thomson Reuters/HKEX Global CNH index, which tracks the offshore yuan against a basket of currencies on a daily basis, stood at 94.32, weaker than the previous day's 94.4.
The global US dollar index fell to 96.748 from the previous close of 97.861.
The offshore yuan fell to fresh six-year lows and broke through 6.8 per US dollar in early trade, but quickly regained ground as the US dollar declined.
The offshore yuan was trading 0.14 per cent weaker than the onshore spot at 6.7805 per US dollar.
Offshore one-year non-deliverable forwards contracts (NDFs), considered the best available proxy for forward-looking market expectations of the yuan's value, traded at 6.943, putting the yuan 2.30 per cent weaker than the midpoint.