SHANGHAI: China’s yuan ended Tuesday’s home buying and selling session at a 5-1/2-month excessive towards the greenback, as buyers welcomed talks between U.S. President Joe Biden and Chinese language chief Xi Jinping.
Each the onshore and offshore yuan jumped, with the onshore spot value hitting a excessive of 6.3666 per greenback earlier than ending home buying and selling session at 6.3770, the strongest such shut since June 1, up 0.11% from earlier late night time shut.
Its offshore counterpart additionally leapt to six.3616 at one level, the best since June 1.
Forex merchants mentioned the assembly between Biden and Xi supplied indicators of enhancements in bilateral relations and possibilities of partial tariff removals.
“The digital summit was solely meant to ease pressure. It was not meant to realize normalisation of the bilateral relationship,” mentioned Raymond Yeung, China economist at ANZ.
“The summit paves the way in which for subsequent commerce negotiations, throughout which the U.S. could soften its commerce measures towards China.” Commerce disputes between the world’s two largest economies have been one of many key elements influencing the yuan and broad monetary market sentiment over the previous few years.
“I feel the (U.S.) president and his secretary of state are starting to seek out channels by which settlement will be reached,” mentioned Carl Tannenbaum, chief economist at Northern Belief.
“And in reality it was simply final week that some contemplation of decreasing tariffs towards China was floated by Washington, and that was eagerly acquired in Beijing. So I need to watch out and never be overoptimistic.” The Biden administration was getting traction with China in talks over Beijing’s compliance with a Trump-era commerce deal, U.S. Commerce Consultant Katherine Tai mentioned final week, however she declined to foretell an end result whereas discussions proceed.
“The potential for substantial enchancment in Sino-U.S. relations inside this yr shouldn’t be excessive,” Marco Solar, chief monetary markets analyst at MUFG Financial institution, mentioned, anticipating the yuan to consolidate on the firmer aspect of 6.4 per greenback within the close to time period. – Reuters