China’s yuan rebounded on Thursday from a 14-year low hit the previous day, snapping an eight-day losing streak after the central bank warned it would crack down on speculative trading and refrain from making large one-way bets on the yuan.
Goldman Sachs’ latest report stated that the statement released by the People’s Bank of China after the market yesterday can be used as the PBOC’s verbal guidance for the recent rapid devaluation of the renminbi, and the short-term decline of the renminbi is expected to slow down.
Goldman Sachs also said in the report that the PBOC’s statement can slow the depreciation of the yuan, but if the dollar continues to strengthen across the board with the support of the US Federal Reserve’s hawkish stance, the yuan may depreciate further against the dollar.
Ahead of Thursday’s open, the PBOC set the midpoint at 7.1102 per dollar, five points above its previous fix of 7.1107.
In the spot market, the onshore RMB opened at 7.1500 and at 7.1903 at midday, closing 117 points or 0.16% higher than the previous day’s late close. Its offshore yuan also rebounded from a fresh low hit a day earlier to trade at 7.192 against the dollar in midday trade.
The yuan hit a low of 7.2521 against the dollar on Wednesday, its lowest level since the 2008 global financial crisis.
A pullback in the U.S. dollar index and a verbal warning from the People’s Bank of China helped boost the yuan in early trade, currency traders said. In particular, the PBOC’s rare strong verbal warning has made many investors reluctant to test the yuan’s new lows.
Separately, the official Securities Times said in a front-page commentary on Thursday that the yuan was unlikely to continue its rapid depreciation. Such official remarks and comments in the state media are often seen by market participants as a sign that authorities are increasingly uneasy about rapid currency movements.