China's yuan firms despite dollar rebound

Business Recorder reported that the yuan firmed on Monday even as the dollar rebounded, and analysts believe exporters used the bounce to settle dollar earnings. The onshore currency traded near 6.7200 per dollar around noon, 0.1% stronger than the previous session's close, close to its strongest level in 3-1/2 years. Over this month the yuan has gained roughly 0.5% against the dollar.

The dollar index held near a one-week high after jumping 0.6% on Friday, when hawkish remarks from Fed Chairman Kevin Warsh lifted it. Warsh said the US central bank would have work to do if officials lacked confidence that inflation was falling toward 2%. Huatai Futures said the dollar gained policy support without starting a fresh upswing, while Nanhua Futures called the period a good window for Chinese exporters to sell.

The People's Bank of China set its mid-point guidance rate at 6.7828 per dollar, largely unchanged. Official data showed factory activity improved in August but still signalled contraction for the second month running, while services and construction stayed soft, pointing to imbalances in the economy.