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Yuan flat as investors sidelined on dimming prospects for Sino-U.S trade deal

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SHANGHAI — China’s yuan was largely flat

in thin trade on Thursday, as uncertainty over whether Beijing

and Washington could reach a preliminary trade deal kept many

investors sidelined.

On Wednesday, a Wall Street Journal report said U.S.-China

trade negotiations have ‘hit a snag’ over farm purchases, with

China not wanting a deal that looks one-sided in the favor of

the United States, citing people familiar with the matter.

A Reuters poll of over 100 economists showed that trade war

is unlikely to see a permanent truce over the coming year.

Prior to market opening on Thursday, the People’s Bank of

China (PBOC) set the midpoint rate at 7.0083 per

dollar, 57 pips or 0.08% weaker than the previous fix of 7.0026.

In the spot market, onshore yuan opened at 7.0240

per dollar and was changing hands at 7.0225 at midday, 5 pips

firmer than the previous late session close.

Onshore spot yuan swung in a narrow range of about 70 pips

in morning trade. Half-day trading volume

totaled $13.509 billion, below an average of about $15 billion.

A trader at a Chinese bank expected the yuan to trade in a

range of 7-7.05 per dollar pending firm developments in the

trade negotiations.

Slower-than-expected October industrial output growth came

as little surprise and had little impact on the market.

“In our view, Beijing faces the dilemma of a worsening

growth slowdown amid a rapid rise in CPI inflation, but

worsening growth prospects will likely push Beijing to do more

to support growth,” Lu Ting, economist at Nomura in Hong Kong,

said in a note.

The global dollar index fell to 98.361 at midday from

the previous close of 98.373.

The offshore yuan was trading at 7.0236 per dollar

as of midday.

The yuan market at 0403 GMT:

ONSHORE SPOT:

Item Current Previous Change

PBOC midpoint 7.0083 7.0026 -0.08%

Spot yuan 7.0225 7.023 0.01%

Divergence from 0.20%

midpoint*

Spot change YTD -2.13%

Spot change since 2005 17.86%

revaluation

Key indexes:

Item Current Previous Change

Thomson 92.28 92.33 -0.1

Reuters/HKEX

CNH index

Dollar index 98.361 98.373 0.0

*Divergence of the dollar/yuan exchange rate. Negative number

indicates that spot yuan is trading stronger than the midpoint.

The People’s Bank of China (PBOC) allows the exchange rate to

rise or fall 2 percent from official midpoint rate it sets each

morning.

OFFSHORE CNH MARKET

Instrument Current Difference

from onshore

Offshore spot yuan 7.0236 -0.02%

*

Offshore 7.0867 -1.11%

non-deliverable

forwards

**

*Premium for offshore spot over onshore

**Figure reflects difference from PBOC’s official midpoint,

since non-deliverable forwards are settled against the midpoint.

.

(Reporting by Winni Zhou and John Ruwitch; Editing by Simon

Cameron-Moore)

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