China's central bank set a stronger midpoint for Chinese Yuan trading against dollar, Yuan traded a little higher in Asia following the fall in the dollar index on Monday night report Toronto Sumitomo Trading International
TORONTO, April 12, 2017 /PRNewswire/ -- The new midpoint rate set before the market open by the People's Bank of China is 6.8957, 85 pips higher than the previous one at 6.9042; the dollar was trading at 6.9036 Yuan at market open and went down to 6.9034 by midday losing 16 pips from yesterday's close.
"Concerns over the bitter relationship between the United States and North Korea and the developing war in Syria weighed on the US Dollar and US Treasuries. While it lowered the expectations for a US interest rates hike, very little has changed in Asia's trading session," said Michael Hudson, Head of Mergers & Acquisitions at Toronto Sumitomo Trading International.
Tighter Chinese capital control stopped capital outflows helping to stabilize the Yuan and kept it from further losses after the Yuan lost around 6.5 percent in 2016 against the dollar. Weaker dollar in the previous months has also helped the Yuan as well as other emerging markets currencies.
We have seen investors acquire larger and larger positions in the Yuan. The reasons are clear, strong capital control with more investor confidence growing. We forecast the Yuan to trade at 6.9 per dollar by the end of 2017.
Chinese capital control regulations brought down China's outbound direct investments (ODI) by 35.7 percent by January 2017 to a 16-month low, not including the investments made by the financial sector, Reuters said. "What the government did has worked," said Director of Corporate Equities, Daniel Holland of Toronto Sumitomo Trading International.
"The substantial tightening has stopped the outflows and the foreign investments are coming back in the form of FDIs and bonds," he added.
The Chinese government now is facing a tough task to restart the RMB internationalization after it was interrupted 3 years ago by the capital outflows.
Trying to promote the global use of the Chinese Yuan, the Chinese government started marketing their debt futures in Hong Kong, the efforts were capped by the operational issues and contracts limits faced by offshore investors. For more information on how to trade foreign exchange derivatives please visit www.tstinternational.com
Toronto Sumitomo Trading International
Toronto Sumitomo Trading International is an Asia-based financial services company with our corporate department in Tokyo, Japan and our retail operation in Toronto, Canada. By connecting markets from East to West, we service the needs of individuals, institutions, and corporates through our two business divisions: Retail, and Corporate (Global Markets and Investment Banking).
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