April,26(Agencies)— China’s yuan firmed on Wednesday rebounding from an over six-week low, as investors’ were heartened by news of a government support plan for overseas trade in response to subdued global demand and exporters complaints over reduced orders.
China’s cabinet issued a plan on Tuesday that included supporting exports of automobiles and facilitating visas for overseas businessmen.
Some analysts still expected the export sector to struggle given the expectations of a recession in the United States, where consumer confidence dropped to a nine-month low in April.
“While the momentum of China’s recovery has been decent this year, it has been mainly driven by domestic recovery rather than exports,” said Khoon Goh, head of Asia research at ANZ.
Goh doubted external demand for China’s goods would pick up any time soon despite the government’s support plan, and he expected this to cap the yuan’s strength.
The spot yuan opened at 6.9198 per dollar and was changing hands at 6.9216 at midday, 107 pips stronger than the previous late session close and 0.03% stronger than the midpoint.
People’s Bank of China set the midpoint rate at 6.9237 per US dollar prior to market open, weaker than the previous fix 6.8847.and a six-week low.
Spot rate is currently allowed to trade with a range 2% above or below the official fixing on any given day.
The global dollar index fell to 101.826 from the previous close of 101.863.
Upcoming dividend payments by overseas-listed Chinese companies’ were likely to dampen the yuan’s strength, according to a recent research by China Zheshang Bank.
Hong Kong-listed Chinese companies will need to pay out dividends totalling about $56 billion between April and August, it said.
The offshore yuan was trading 0.16% weaker than the onshore spot at 6.9324 per dollar.
The one-year forward value for the offshore yuan traded at 6.7664 per dollar, indicating a roughly 2.45% appreciation within 12 months.