USD/CNY central parity rises for third straight session; onshore rate hits more than two-week high

TechFlow reports that on November 4, the yuan's central parity against the U.S. dollar was set at 6.7180, adjusted weaker by 30 basis points from the previous trading session, marking the third consecutive daily weakening, the weakest level since October 23, and notably weaker than Reuters' forecast of 6.6811.

According to Reuters, the onshore yuan briefly fell to around 6.68 in the morning session, its weakest since October 19, while the offshore yuan weakened in tandem.

Earlier, the People's Bank of China announced on November 3 that it would raise the foreign exchange deposit reserve ratio for financial institutions from 4% to 6% effective November 15, the first increase since December 2021. After the news, USD/CNH rose more than 280 basis points intraday at one point, touching 6.675.

Market participants believe the move is aimed at curbing the yuan's rapid appreciation. The yuan has appreciated about 5% against the dollar year to date, and the CFETS RMB exchange rate index previously hit its highest level since July 2022.

Source: TechFlow