China’s yuan is getting a little stronger
Asian markets moved slightly higher on Thursday, while the Chinese central bank guided the yuan to its highest level in nearly five months.
Japan’s Nikkei 225 rose 0.4%. China’s Shanghai Composite gained 0.4%. South Korea’s Kospi traded flat, as the market reopened after the Christmas holiday.
Hong Kong markets remained closed and are scheduled to resume trading Friday.
The People’s Bank of China raised its daily reference rate for the yuan to about 6.98 per US dollar — the highest level since early August. China’s central bank sets a “band” every day within which the yuan’s value is only allowed to move 2% up or down.
The Chinese currency is now trading at about 6.996 yuan per dollar in mainland China. In trading outside of China, where the yuan moves more freely, one dollar can buy about 6.994 yuan — slightly weaker than Wednesday.
Even so, the yuan has rebounded about 1.5% against the dollar since mid-December, when the United States and China reached an interim trade deal.
A Chinese foreign ministry spokesperson said Wednesday that negotiators are “in close communication” about signing a “phase one” trade deal. Earlier, US President Donald Trump told reporters that he will hold a signing ceremony with Chinese President Xi Jinping. But he did not elaborate.
The yuan has been closely watched this year. In August, China allowed a surprise devaluation of the currency, which briefly sent global markets into a tailspin. That move — which happened after Washington announced plans to tax every Chinese export — was interpreted at the time as a sign that Beijing could have been prepared to deploy its currency as a weapon in the trade war.
