Another surprise came from PBoC on Monday as the RMB fix reversed course with a 594bp weakening against the dollar to 6.9262. On Friday, the PBoC had set the fix 639bp stronger at 6.8668. The lower fix came despite the dollar index trading slightly weaker at 100.200.
In the spot market, the onshore RMB (CNY) was trading at 6.9330 at
The new trade-weighted currency index by CFETS closed 0.4% higher at 95.25 on January 6, with the other two reference indices — one based on a Bank for International Settlement (BIS) basket and the other based on the special drawing rights (SDR) basket — also slightly up to 96.63 and 96.07 respectively.
The Thomson Reuters reference CNY index (RXY CNY) was up 0.25% to 95.51 as of
The State Administration of Foreign Exchange (Safe) laid out its primary objectives for 2017 in
Despite expectations of another sharp drop in China’s foreign exchange reserves due to strong capital outflow pressure and central bank interventions to stabilise the currency, the drop for the month of December was $41bn to $3.01tr.
China’s authorities attributed last year’s $319.8bn drop in FX reserves to PBoC’s efforts to keep the renminbi relatively stable against a strengthening dollar, according to a statement published by Safe over the weekend. In addition, a strengthening greenback has caused a drop in valuation of non-dollar assets, which also prompted a fall in FX reserves for China. However, the Chinese central bank pointed out that the decline recorded in 2016 was significantly lower than the Rmb512.7bn ($74.3bn) drop in 2015.
The Hong Kong Exchange (HKEX) said in a monthly report that the average daily turnover of RMB Currency Futures throughout 2016 was 2,206 contracts — up 108% compared to 1,062 contracts in 2015.
USDCNH futures reached a record high open interest of 45,635 contracts as of December 30, HKEX added.
The Shenzhen-Hong Kong Stock Connect launched in early December saw average daily southbound flows of Rmb388m, 3.7% of the daily quota, while northbound flows averaged Rmb910m, 7% of the daily quota.
The General Administration of Customs (GAC) is looking to boost foreign investment into China via the development of free trade zones, Li Guo, vice-minister of GAC, said in a State Council policy briefing on January 6.
Out of the latest 60 measures introduced by the GAC to facilitate trade, 50 were first launched in Shanghai FTZ, Li said. New measures are now being looked at to support the third batch of FTZ in seven additional provinces and cities approved last year.
UniCredit’s Shanghai branch successfully joined China’s onshore interest-rate swap market, signing an agreement with the regulators last week.