SHANGHAI, July 12 (Reuters) - China's yuan eased on
Friday after strengthening to a one-month high, as the central
bank set a mild guidance rate.
Also weighing on sentiment, trade data late in the morning
was mixed, with the country's exports rising more than expected
in June, while imports unexpectedly shrank, highlighting
persistently weak domestic demand.
By 0350 GMT, the yuan was 0.09% lower at 7.2639
to the dollar after trading in a range of 7.2575 to 7.2677.
Prior to the market opening, the People's Bank of China set
the midpoint rate, around which the yuan is allowed
to trade in a 2% band, at 7.1315 per dollar, 1,199 pips firmer
than a Reuters' estimate.
The gap between estimate and PBOC's fixing rate was narrower
than Thursday's 1,391 pips, showing the central bank was
"potentially allowing more room for two-way moves in the USDCNY
(dollar yuan pair)," said Maybank analysts in a note.
The central bank has been gradually lowering its daily yuan
official guidance, well within market projections but with a
bias suggesting it is allowing some depreciation, traders and
analysts said.
The spot yuan opened at 7.2575 per dollar and was
last trading 71 pips firmer than the previous late session close
and 1.86% weaker than the midpoint.
The yuan is up 0.1% against the dollar this month, while
2.2% weaker this year. It has been under pressure since early
2023 as a prolonged property crisis, anaemic consumption and
falling yields drive capital flows out of yuan, and foreign
investors stay away from the country's struggling stock market.
The dollar was on the defensive, with the dollar index
, which measures the U.S. currency against six rivals, at
104.47, not far from the one-month low of 104.07 it touched on
Thursday.
The dollar slumped after data showed U.S. consumer prices
fell for the first time in four years in June, firmly putting
disinflation back on track and drawing the Federal Reserve
another step closer to cutting interest rates in September.
Based on Friday's official guidance, the yuan is allowed to
drop as far as 7.2741.
The offshore yuan traded at 7.2755 yuan per dollar,
down about 0.08% in Asian trade.
Key onshore vs offshore levels:
* Overnight dollar/yuan swap onshore -22.60 pips vs.
offshore
-22.60
* Three-month SHIBOR 1.9 % vs. 3-month CNH HIBOR
3.2 %
LEVELS AT 03:49 GMT
INSTRUMENT CURRENT UP/DOWN(-) % CHANGE DAY'S HIGH DAY'S
vs USD VS. PREVIOUS YR-TO-DATE LOW
CLOSE %
Spot yuan 7.2639 -0.08 -2.23 7.2575 7.2677
