China's yuan inches higher as midpoint rate firmer despite US rate hike

HONG KONG: China’s yuan rose slightly against the US dollar on Thursday as the central bank lifted the midpoint fixing to another 3-1/2-month high despite a jump in the greenback after the Federal Reserve raised interest rates. The dollar clung to a seven-week high on Thursday after the Fed raised interest rates by a quarter overnight and flagged more hikes in coming months. Shrugging off the dollar rally, prior to the market opening, the People’s Bank of China set the midpoint rate at 6.7580 per dollar, its strongest since February 3, 2023 and 339 pips weaker than a Reuters’ estimate. The spot yuan is allowed to trade 2% either side of the fixed midpoint each day. Kimmy Tong, an FX strategist at Everbright Securites, believes the central bank uses a “counter-cyclical adjustment” within its fixing formula to curb excessive volatility and signal a clear preference for currency stability. The central bank may also want to “maintain strong position of yuan before Golden Week and US-China leader meeting,” Tong said. The spot yuan was 0.03% higher at 6.7083 to the dollar as of 0349 GMT, after trading in a range of 6.7082 to 6.7128. Some analysts said the US rate hike had already been la