The USD to CNY trading pair trades flat in sessions after news from China’s foreign exchange reserve broke out. The looming uncertainties from the US-Sino trade war also prevented the pair from rallying.
Beijing’s foreign exchange reserve dropped last month after three consecutive months of gains. According to a regulator, China’s forex reserve drop was mainly due to valuation factors.
After the news broke out the Chinese yuan gained in sessions against other currencies. However, its pair with the greenback failed to gain altitude.
The USD to CNY exchange rate did not change from its previous close of ¥7.1484. The day’s range of the USD to CNY pair also remained at ¥7.1484 flat.
Meanwhile, the CNY CNH or Chinese yuan / Chinese yuan offshore gained 0.19% or 0.0019 points in sessions.
The Chinese yuan, one of the currencies that is most affected by the trade war, continues to move wildly. Also, there was no onshore trading this Monday as it is the last day of China’s long holiday break for Chinese national day.
Room for Reserve
Last month, China’s foreign exchange reserve fell by $14.75 billion to $3.092 trillion. The data came from a report released by the People’s Bank of China.
The fall even surpassed forecasts of $12 billion by analysts and economists. On a separate statement from the PBOC, China’s forex regulator said that the fall was due to declines of bond prices in major economies.
The regulator also takes into account the stronger US dollar and its depreciation against nondollar assets. The group also said that the resilient Chinese economy could still support the foreign exchange reserves as market volatilities continue to increase.
Authorities from Beijing refrained from going through China’s vast reserve to shore up the currency. Instead, they resorted to other steps like central bank bills in offshore markets to pull more short-selling of the yuan.