Yuan Sees Volatile Trading After Unexpected US Inflation Data

The yuan rose in volatile trading on Friday after US inflation data was released. The offshore yuan pair fell as much as 0.1% to 6.7060, but initially rose to 6.7148 following the Consumer Price Index (CPI) release. The onshore yuan pair declined 0.1% to 6.7055, after earlier climbing to 6.7138.

Zhaopeng Xing, a senior China strategist at Australia & New Zealand Banking Group, predicted that if the Federal Reserve raises interest rates, the yuan may stabilize around 6.70 and the yield curve will flatten. This would give room for both onshore and offshore yields to decline.

Elias Haddad, global head of market strategy at Brown Brothers Harriman, said the Chinese currency will remain largely unaffected by the Fed decision, 'aside from a short-term blip'. The Hong Kong dollar pair held steady at 7.8424.