BEIJING, Nov 29 — The yuan jumped against the dollar today amid hopes of a potential easing in the country’s strict pandemic restrictions following an unprecedented episode of unrest.
The euro rose ahead of inflation data due tomorrow.
China will speed up Covid-19 vaccinations for elderly people, health officials said today, aiming to overcome a key stumbling block in efforts to ease unpopular “zero-Covid” curbs.
The offshore yuan surged 0.9 per cent to 7.1850 a dollar. The onshore yuan was up 0.6 per cent at 7.1666 per dollar.
“People are getting quite excited about some sort of reopening,” said Alvin Tan, head of Asia FX strategy at RBC Capital Markets.
The US dollar, which rallied in the previous session on mounting worries over China’s Covid-19 situation, fell 0.4 per cent to 106.19.
The Aussie, often used as a liquid proxy for the yuan, rose 1.2 per cent to US$0.6734 (RM3.04). The kiwi similarly gained 1.3 per cent to US$0.6239.
Risk-sensitive sterling strengthened 0.7 per cent to US$1.2043. The Japanese yen last traded about 0.75 per cent higher at 138.19 per dollar.
Police yesterday stopped and searched people at the sites of weekend protests in Shanghai and Beijing, after crowds there and in other Chinese cities demonstrated against the country’s strict zero-Covid policy.
Protests have spread to at least a dozen cities around the world in a show of solidarity.
Euro zone inflation
The euro was up 0.4 per cent at US$1.0380, not far from a five-month peak of US$1.0497 hit yesterday.
European Central Bank President Christine Lagarde said overnight that euro zone inflation had not peaked and it risked turning out even higher than currently expected, hinting at a series of interest rate hikes ahead.
Flash euro zone inflation figures for November are due tomorrow, with economists polled by Reuters expecting inflation to come in at 10.4 per cent year-on-year.
Ahead of that, figures showed yesterday that Spain’s consumer prices in the 12 months to November rose 6.8 per cent, a slower pace than the previous 7.3 per cent figure marked in October. Inflation numbers from Germany are expected later today.
“The consensus is for German headline inflation to stabilise at 10.4 per cent and eurozone figures to slow slightly tomorrow,” said Francesco Pesole, FX strategist at ING.
“It’s difficult to see this significantly altering the ECB’s narrative, but an above-consensus print may prompt markets to seriously consider a 75 basis point hike in December”.
The greenback remained marginally supported by hawkish Federal Reserve speakers overnight.
St Louis Fed President James Bullard said the Fed needed to raise interest rates quite a bit further, while New York Fed President John Williams and Richmond Fed President Thomas Barkin echoed similar views.
Comments from Fed Chair Jerome Powell on Wednesday will be watched for new signals on further tightening, with key US jobs data for November due on Friday. The US central bank is widely expected to hike rates by an additional 50 basis points when it meets on December 13-14. — Reuters
