Shanghai: China’s yuan was little changed against the dollar on Thursday, despite a survey showing stronger-than-expected growth in China’s manufacturing sector, though traders expect that a sustained improvement in the economy will support the yuan in the long term.
The Flash HSBC Purchasing Managers’ Index rose to 50.1 from July’s final reading of 47.7, indicating that activity in China’s vast manufacturing sector hit a four-month high due to a rebound in new orders, reinforcing signs of stabilisation in the world’s second-largest economy.
“The data today shows the performance of the economy is improving. That will favour the yuan’s value in longer term,” said a dealer at a Chinese commercial bank in Shanghai.
“However, the market here mainly watches the central bank’s guidance, and the slightly weaker midpoint today set the tone for the yuan to slip.”
Spot yuan changed hands around 6.1240 per dollar near midday, down 0.01 per cent from the previous close of 6.1234, after the People’s Bank of China (PBOC) set its midpoint at 6.1698, or 0.04 per cent weaker than Wednesday.
The PBOC launched a new phase of yuan appreciation two weeks ago, guiding the yuan to a slew of record highs since then, with an all-time peak of 6.1090 being hit last Friday, but the central bank has kept the yuan largely stable this week.
Traders said the yuan is likely to resume its appreciation soon, with its general uptrend to last until at least early September, when a G20 summit kicks off in Moscow.
China has traditionally let the yuan appreciate ahead of major international political events in a gesture to trading partners who feel the yuan is undervalued.