Banks make own trading decisions: analysts
The strengthening of the offshore yuan on Wednesday doesn't necessarily reflect the intervention of the authorities, as Chinese banks make trading decisions of their own, analysts said.
Bloomberg reported on Wednesday that the Chinese authorities intervened via banks to support the offshore yuan in morning trading, citing people with knowledge of the matter.
The offshore yuan was trading 0.4 percent higher at 6.6572 per dollar in Hong Kong as of press time. The People's Bank of China (PBOC), the country's central bank, set the midpoint rate of the onshore yuan at 6.6324 per dollar on Wednesday, or 0.31 percent stronger than the pre-fixing level of 6.6528, PBOC data showed.
The onshore yuan was almost unchanged on Wednesday, hovering near its five-and-a-half-year low against the dollar, which indicated that the PBOC remained on the sidelines in the morning in the domestic market, Reuters said, citing traders.
Foreign Ministry spokesman Hong Lei said on Wednesday that the yuan's exchange rate against the dollar is not the cause of trade imbalances between China and the US, according to a statement on the website of the Ministry of Foreign Affairs on Wednesday.
He said that bilateral economic and trade cooperation will improve the overall relationship and maintain the sound and stable development of their cooperation.
The PBOC may not have intervened to support the yuan because the unexpected UK vote to leave the EU had only a transitory effect on the yuan, Liu Jian, a senior analyst at Bank of Communications, told the Global Times on Wednesday.
Liu said the exchange rate of the offshore yuan is hard to influence as it's set in a market-oriented and transparent manner.
The authorities couldn't have intervened in the morning, because the trend of the yuan is still unclear at that time of the trading day, Liu said.
The yuan remains stable against a basket of currencies and policymakers will stick to their current exchange rate regime, the PBOC said Tuesday in a statement on Weibo.
On August 11, 2015, the PBOC adjusted the yuan's central parity against the dollar, making it more market-oriented, while it also started to set the yuan's value against a basket of major currencies.
