Receive $80 Grab vouchers valid for use on all Grab services except GrabHitch and GrabShuttle when you subscribe to BT All-Digital at only $0.99*/month.
Find out more at btsub.sg/promo
[HONG KONG] China's yuan firmed against the US dollar on Wednesday, after the global dollar index fell further to a 1-1/2-month low overnight amid a slide in Wall Street stocks that eroded the greenback's interest rate allure.
The People's Bank of China set the midpoint rate at 6.8889 per US dollar prior to market open, firmer than the previous fix 6.9071.
The spot market opened at 6.8861 per US dollar and was changing hands at 6.8826 at midday, 102 pips stronger than the previous late session close and 0.09 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.
"Volatility in the spot yuan market has been quiet small recently and it is just tracing the global dollar index movement," said a trader at a Chinese bank in Shanghai.
The Thomson Reuters/HKEX Global CNH index, which tracks the offshore yuan against a basket of currencies on a daily basis, stood at 94.33, firmer than the previous day's 94.2.
The US dollar index against a basket of major currencies retreated to a 1-1/2-month low of 99.642 overnight.
Investors are worried that US President Donald Trump will struggle to deliver promised tax cuts that propelled the market to record highs in recent months, with nervousness deepening ahead of a key healthcare vote on Thursday.
The market also questioned Mr Trump's ability to pass tax and spending reforms further down the line, said Stephen Innes, senior trader at Oanda.
The greenback has faced a confluence of negative factors recently, as US dollar bulls were disappointed that the Federal Reserve did not signal a faster pace of rate hikes while the US dollar also felt pressure from a resurgent euro.
The offshore yuan was trading 0.18 per cent stronger than the onshore spot at 6.87 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 7.0835, 2.75 per cent weaker than the midpoint.
One-year NDFs are settled against the midpoint, not the spot rate.