China's yuan steady as dollar rebounds, investors eye US CPI

According to Business Recorder, the Chinese currency held roughly flat versus the greenback on Friday, with the spot rate at 6.7109 per dollar by 0249 GMT. It was six pips firmer than the prior late session close, even as the dollar stayed near a one-week high. Renewed concern about energy supply in the Middle East had pushed bond yields and oil prices higher, leaving the yen weaker for a second session.

The People's Bank of China set the midpoint at 6.7743 per dollar before the market opened, marking its firmest reading since Feb 6, 2023, yet it sat 569 pips weaker than a Reuters estimate. Spot trading can deviate up to 2% from that reference rate each day. On Thursday, deputy governor Lu Lei said Beijing planned to keep the yuan largely steady and did not aim to gain a trade edge by letting it weaken.

Focus now moves to the US consumer price report scheduled for later on Friday, ahead of the Federal Reserve's gathering next week. Expectations of a rate increase had already firmed following August's rise in US producer prices. MUFG analysts warned in a note that Asian currency resilience may not last near term, and that implied FX volatility on USD/CNH has fallen to multi-decade lows. The dollar index edged up 0.030% to 99.11, while offshore yuan was quoted at 6.7115 per dollar, around 0.04% stronger in Asian trade.