Yuan starts 2021 with brisk gains

Tuesday, 5 January 2021 00:49 - - {{hitsCtrl.values.hits}}

SHANGHAI (REUTERS): The Yuan leapt nearly 1% against the dollar on the first trading day of the year on Monday, its biggest daily gain in about three months and breaching a key technical barrier that analysts say could extend last year's strong gains.

The onshore yuan strengthened 6.7% in 2020, booking its first annual rise in three years, as a weaker US dollar, a widening yield gap between China and the United States, and effective coronavirus containment in the world's second-largest economy supported the Chinese unit.

Prior to market opening, the People's Bank of China (PBOC) set the midpoint rate at 6.5408 per dollar, 159 pips or 0.24% weaker than the previous fix of 6.5249. In the spot market, the onshore yuan opened at 6.5195 per dollar and jumped to a high of 6.4670 at one point, its strongest level since 20 June 2018. By mid-day, the yuan was at 6.4702, 581 pips firmer than the previous late session close on 31 December 2020 and marching towards its best day since 9 October 2020.

The currency also appears to have overcome immediate concerns about official efforts to curb any rally past key thresholds.