(Bloomberg) -- China set its reference rate for the yuan at a stronger-than-expected level for a third consecutive day, as it sought to keep the currency stable following a record drop last month.
The People's Bank of China set the fixing at 6.5672 per dollar, compared with the average estimate of 6.5699 in a Bloomberg survey of analysts and traders. China's financial markets reopened Thursday after a three-day break. The onshore yuan edged higher to 6.6045 per dollar, while the offshore yuan is little changed at 6.6248.
“The yuan fixing was slightly stronger than expected, which suggests the authorities are keen to keep the currency stable following the weakness seen in recent weeks,” said Khoon Goh, head of Asia research at Australia & New Zealand Banking Group in Singapore. “With the USD weakening post the FOMC decision, we should see some pressure off the yuan in the near-term.”
The offshore and onshore yuan fell more than 4% against the dollar in April, marking their worst declines on record. The losses follow a bout of volatility in Chinese equities as the nation's Covid Zero strategy weighs on sentiment and slows economic growth.
The central bank has so far refrained from heavy-handed moves to intervene, relying instead on guiding the market with the fixing and cutting foreign-exchange reserve requirements to slow the currency's rapid slump.
Despite such measures, the yuan remains under pressure. Banks including Credit Agricole CIB and Standard Chartered Bank Plc. have recently slashed their forecasts for the yuan.
Qi Gao, a currency strategist at Scotiabank in Singapore, said he expects the yuan to trade between 6.6-6.7 per dollar in the near term.
The fixing limits the onshore yuan's moves by 2% on either side.
©2022 Bloomberg L.P.
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