Yuan finishes domestic session at over 1-mth high on sign of easing trade tension
(Updates closing price and adds details)
SHANGHAI, Nov 2 (Reuters) - China's yuan jumped on Fridayafternoon, finishing domestic trade at its strongest in morethan a month, supported by rising hopes that trade tensionbetween China and the United States will ease.
The Chinese currency traded well above a 10-year low hitearlier in the week and also looked set for its biggest weeklygain since late August.
The onshore yuan ended domestic trade at 6.8897per dollar at 0830 GMT, the strongest close since Sept. 28, and302 pips, or 0.44 percent, firmer than the previous late nightclose.
If the yuan finishes the late night session at the domesticclosing level, it would have gained 0.8 percent for the week, arare winning week for a currency that has suffered persistentdepreciation pressure this year due to headwinds faced byChina's economy and the trade dispute with the United States.
Bloomberg reported on Friday, citing people familiar withthe matter, that U.S. President Donald Trump wants to reach anagreement with Chinese President Xi Jinping at a Group of 20summit in Argentina late this month. Trump has asked key U.S. officials to begin draftingpotential terms, Bloomberg said, adding that the push for a dealwith China was prompted by a telephone call with Xi on Thursday.
Trump and Xi both expressed optimism on Thursday aboutresolving their bitter trade disputes. "While our baseline forecast remains that the current 10percent U.S. tariffs on $200 billion of Chinese exports willincrease to 25 percent in January, the latest development hasreduced the probability of that increase, as well as the chancethat more tariffs will be imposed on the rest of Chinese exportsto the U.S," said Wang Tao, head of China economic research atUBS in Hong Kong.
Prior to the market opening, the People's Bank of China(PBOC) lifted its official yuan midpoint by the most in morethan two months, to 6.9371 per dollar, on hopes of the trade rowbeing resolved.
The official yuan midpoint , the strongest sinceOct. 24, was 299 pips, or 0.43 percent, firmer than the previousfix of 6.9670.
The move in Friday's official guidance rate was the biggestone-day strengthening in percentage terms since Aug. 28. And theguidance rate was 31 pips firmer than Reuters' estimate of6.9402 per dollar.
Earlier in the week, the yuan was sliding towards thepsychologically critical 7 per dollar, a level last seen duringthe global financial crisis, raising speculation over whetherthe central bank would mount a defence.
For the year, the yuan has lost 5.6 percent, though it isdown about 9 percent since March, when the first round oftit-for-tat U.S. and Chinese tariffs were announced.
Some market participants said they would pay attention tothe U.S. job data that is due to be released late in the sessionand the upcoming U.S. mid-term elections next week, as bothevents are likely to bring volatility to major currencies.
The offshore yuan was trading at 6.8846 per dollaras of 0830 GMT after surging to a high of 6.8820, the strongestlevel since Oct. 12.
(Reporting by Winni Zhou and John RuwitchEditing by Simon Cameron-Moore, Robert Birsel)
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