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HONG KONG, Aug 17 (Reuters) – The yuan firmed on Monday as investors stayed optimistic that Beijing and Washington would stick to their Phase-1 trade deal, after a high level meeting on the weekend was postponed, giving China more time to comply with terms of the agreement.
The onshore yuan CNY=CFXS was 0.13% stronger at 6.9412 per dollar at 0406 GMT, while the offshore yuan CNH=D3 firmed 0.04% to 6.9370. The global dollar index =USD was flat at 92.987.
China is struggling to fulfill its promised purchases of U.S. goods due to the coronavirus economic shock. But it has ramped up imports in recent weeks as domestic activity rebounded. U.S. officials have signaled that they are satisfied and have no plans to abandon the deal.
No new date has yet been set for the half-year compliance review, sources told Reuters.
“Various signs indicate the delay of the meeting does not necessarily imply there are problems with the trade agreement,” analysts at China Merchants Bank said in a note. “The two sides are still making an effort for the meeting on many different levels.”
Sino-U.S. relations remain strained with President Donald Trump threatening to pressure more Chinese companies including e-commerce giant Alibaba 9988.HKBABA.N after banning the video app Tiktok.
However, confidence the deal will stay intact has helped Chinese shares rally over 2%, enough to keep yuan strength going on Monday, said two traders in Shanghai. .SS
Stocks jumped after the People’s Bank of China injected cash through medium-term loans, while keeping their interest rates unchanged for the fourth straight month.
The central bank set the midpoint rate CNY=PBOC at 6.9362 prior to market open, strongest since March but close to the Reuters estimate of 6.9371.
The Thomson Reuters/HKEX Global CNH index .RXYH, which tracks the offshore yuan against a basket of currencies on a daily basis, fell slightly to 92.
The yuan market at 0406 GMT:
PBOC midpoint CNY=SAEC
Spot yuan CNY=CFXS
Divergence from midpoint*
Spot change YTD
Spot change since 2005 revaluation
Thomson Reuters/HKEX CNH index
*Divergence of the dollar/yuan exchange rate. Negative number indicates that spot yuan is trading stronger than the midpoint. The People’s Bank of China (PBOC) allows the exchange rate to rise or fall 2% from official midpoint rate it sets each morning.
OFFSHORE CNH MARKET
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