China holds line on yuan, stocks weaken again

SHANGHAI, Rabi’II 3, 1437, Jan 13, 2016, SPA — China’s central bank held the line on its yuan for a fourth straight session on Wednesday while putting the squeeze on offshore sellers of the currency, calming fears of a sustained depreciation – at least for now, Reuters reported.

Having been alarmed by a near 5 percent slide in the yuan since August, investors globally appeared relieved by the stabilisation.

Asian share markets outside China rose, and proxies for the yuan in currency markets, such as the Australian dollar, also firmed, while investors retreated from the safe-haven yen.

Chinese shares, however, ended the day sharply lower after a positive start, shrugging off December trade data, which beat forecasts and tempered some of the fears about the slowdown in the world’s second-largest economy.

The People’s Bank of China (PBOC) fixed the daily mid-point for the yuan at 6.5630 to the dollar, little changed from firm fixes on the previous two days. The market is allowed to deviate 2 percent either side of the daily fix.

By early evening the onshore spot rate had firmed to 6.5742 from the overnight close of 6.5756, and offshore the yuan was just a few pips away at 6.5736, also firmer.

The Shanghai Composite Index ended down 2.4 percent, dipping below the 3,000 mark, while the CSI300 index shed 1.9 percent.

The indexes have now lost around 16 percent so far in 2016.

–SPA
15:34 LOCAL TIME 12:34 GMT