The Chinese yuan firmed 0.65 per cent against the greenback to 7.017 per dollar after touching 7.0156 on the session
Yuan hit a 16-month high against the U.S. dollar on Tuesday, after the central bank of the world’s second-biggest economy unveiled new stimulus measures, while the dollar extended declines against other major currencies after soft consumer data.
Beijing’s new plan includes a planned 50 bp cut to banks’ reserve requirement ratios, injecting more funds into the economy and an easing of mortgage repayments for households.
The Chinese yuan firmed 0.65 per cent against the greenback to 7.017 per dollar after touching 7.0156 on the session.
It hit all the things that people wanted to see – more support for the housing market, lower interest rates, reserve rate cut and support for the stock market, according to Marc Chandler, chief market strategist at Bannockburn Global Forex.
At least initially the market is giving Beijing the benefit of the doubt. I’m not convinced that the underlying problems, the underlying challenges are really being addressed, he added.
The dollar index extended declines after economic data from the Conference Board showed U.S. consumer confidence unexpectedly declined in September to 98.7 from an upwardly revised 105.6 in August and below the 104.0 estimate of economists polled by Reuters as concerns over the health of the labour market grew.
The dollar index, which measures the greenback against other major currencies including the yen and the euro, dropped 0.44 per cent, on track for its biggest daily percentage decline in two weeks, to 100.49. The dollar had tumbled for three consecutive weeks on expectations for a rate cut from the Fed, which delivered an upsized 50 bp cut last week.
The euro jumped 0.46 per cent at $1.1163.
