Advertisement

Yuan slides, dollar jumps as investors await rate rise clues from Fed Chair Yellen

US dollar index jumped to its highest level since January 13 after a lack of policy detail in Trump’s Congressional address sharpened focus on Yellen

Reading Time:2 minutes
Why you can trust SCMP
0
President Donald Trump addresses the joint session of Congress on Capitol Hill in Washington. Vice President Mike Pence and House Speaker Paul Ryan applaud behind him. Photo: AP

The Chinese yuan weakened on Wednesday as the US dollar surged to a more than one-month high in the afternoon.

Investors shifted their focus towards Federal Reserve Chair Janet Yellen’s speech on Friday, which may provide signals of an interest rate rise in March. They will be listening to her words even more keenly after President Donald Trump failed to provide any meaningful details about his budget plans during his highly anticipated first address to Congress.

Onshore yuan closed at 6.8800 against the US dollar, 0.2 per cent or 110 points weaker. Offshore yuan dropped 131 points, or 0.2 per cent, to 6.8686 per US dollar.

The People’s Bank of China set the yuan’s reference rate at 6.8798 on Wednesday, 48 points below its level on Tuesday.

The DXY, the USddollar index that tracks its value against a basket of six rival currencies, at one stage surged to 101.79, the strongest level since January 13, as traders switched their attention to the rising possibility of an interest rate rise this month.

“Trump’s speech didn’t really say anything new about his policies. That is disappointing, but is also expected,” said Mark Wan, chief analyst at Hang Seng Investment Services.
Yuan and US dollar banknotes. Photo: Reuters
Yuan and US dollar banknotes. Photo: Reuters
Advertisement