The offshore stages biggest rally since August


The phase-one trade deal offers an end to the tension that has roiled markets this year
Chief Investment Office13 Dec 2019
Photo credit: AFP Photo


The offshore Chinese yuan staged its biggest rally in more than four months on Thursday (12 December) as the US reached a trade agreement with China, paving the way to at least a temporary end to tension that has roiled markets all year.

The yuan advanced 1.2% to 6.9457 per dollar, the highest since 31 July after trimming a gain of as much as 1.5% and revisiting its 200-day moving average for the first time since July. The Chinese currency at one point squeaked past the key 7.00 key level last breached in August – ironically, after US President Donald Trump threatened to raise tariffs on Chinese goods as talks stalled.

Trump signed off on a so-called phase-one trade deal, averting the 15 December introduction of a new wave of US levies on about USD160b of consumer goods from the Asian nation, Bloomberg News reported. The US has added a 25% duty on about USD250b of Chinese products and a 15% levy on another USD110b of its imports over the course of a roughly 20-month trade war.

The onshore yuan, meantime, closed at mid-morning New York time 0.15% higher, at 7.028 per dollar, just after news had broken that an agreement was nearing completion but before Trump signed off on it. That means it will probably surge when Asian markets open on Friday.

Traders will also eye the daily yuan fixing at 9:15 am Friday Beijing time from the People’s Bank of China for potential policy signals. The reference rate was set at 7.0253 per dollar on Thursday and has stayed weaker past 7 level since 12 November. – Bloomberg News.

The US Dollar Index (DXY) gained 0.33% to 97.397 on Thursday, the euro was flat at USD1.1130, the pound fell 0.27% to USD1.3161, while the yen declined 0.69% to 108.31 per dollar.

The information published by DBS Bank Ltd. (company registration no.: 196800306E) (“DBS”) is for information only. It is based on information or opinions obtained from sources believed to be reliable (but which have not been independently verified by DBS, its related companies and affiliates (“DBS Group”)) and to the maximum extent permitted by law, DBS Group does not make any representation or warranty (express or implied) as to its accuracy, completeness, timeliness or correctness for any particular purpose. Opinions and estimates are subject to change without notice. The publication and distribution of the information does not constitute nor does it imply any form of endorsement by DBS Group of any person, entity, services or products described or appearing in the information. Any past performance, projection, forecast or simulation of results is not necessarily indicative of the future or likely performance of any investment or securities. Foreign exchange transactions involve risks. You should note that fluctuations in foreign exchange rates may result in losses. You may wish to seek your own independent financial, tax, or legal advice or make such independent investigations as you consider necessary or appropriate.

The information published is not and does not constitute or form part of any offer, recommendation, invitation or solicitation to subscribe to or to enter into any transaction; nor is it calculated to invite, nor does it permit the making of offers to the public to subscribe to or enter into any transaction in any jurisdiction or country in which such offer, recommendation, invitation or solicitation is not authorised or to any person to whom it is unlawful to make such offer, recommendation, invitation or solicitation or where such offer, recommendation, invitation or solicitation would be contrary to law or regulation or which would subject DBS Group to any registration requirement within such jurisdiction or country, and should not be viewed as such. Without prejudice to the generality of the foregoing, the information, services or products described or appearing in the information are not specifically intended for or specifically targeted at the public in any specific jurisdiction.

The information is the property of DBS and is protected by applicable intellectual property laws. No reproduction, transmission, sale, distribution, publication, broadcast, circulation, modification, dissemination, or commercial exploitation such information in any manner (including electronic, print or other media now known or hereafter developed) is permitted.

DBS Group and its respective directors, officers and/or employees may have positions or other interests in, and may effect transactions in securities mentioned and may also perform or seek to perform broking, investment banking and other banking or financial services to any persons or entities mentioned.

To the maximum extent permitted by law, DBS Group accepts no liability for any losses or damages (including direct, special, indirect, consequential, incidental or loss of profits) of any kind arising from or in connection with any reliance and/or use of the information (including any error, omission or misstatement, negligent or otherwise) or further communication, even if DBS Group has been advised of the possibility thereof.

The information is not intended for distribution to, or use by, any person or entity in any jurisdiction or country where such distribution or use would be contrary to law or regulation. The information is distributed (a) in Singapore, by DBS Bank Ltd.; (b) in China, by DBS Bank (China) Ltd; (c) in Hong Kong, by DBS Bank (Hong Kong) Limited; (d) in Taiwan, by DBS Bank (Taiwan) Ltd; (e) in Indonesia, by PT DBS Indonesia; and (f) in India, by DBS Bank Ltd, Mumbai Branch.