Rumours of sharp drop in China's yuan swirl on social media

Rumours of sharp drop in China's yuan swirl on social media

Rumours swirled on social media on Tuesday that China's currency dropped sharply in overnight trade, but the purported move may have been an isolated hiccup from some providers.

Some currency data providers were showing that the yuan tumbled, with the dollar fetching as much as 7.49 yuan (S$1.42) in overnight trade.

It wasn't clear if the data were indicating the offshore yuan or the onshore currency, but the onshore currency does not trade overnight.

That would have been an 8.8 per cent rise for the currency pair from the onshore close of 6.8830, according to Reuters data.

China's central bank does not allow the currency to move more than 2 per cent from its daily fixing in onshore trade.

While policymakers can not closely control offshore trade of the currency, it usually remains relatively close to its onshore counterpart.

Data charts on Google and currency-data provider and money transfer service XE showed the short-lived blip.

An email to XE sent outside office hours wasn't immediately returned.

Dow Jones reported that UK-based brokerage and data provider ICAP was the source for the data.

A call to ICAP's Singapore office went unanswered and it didn't immediately return an emailed request for comment.

An email to a Google representative wasn't immediately returned.

Google's data chart indicated that the data source was data provider SIX Financial Information.

A call to SIX's Singapore office went unanswered and an emailed request for comment wasn't immediately returned.

Analysts generally indicated to CNBC that they hadn't seen any sign of the drop.

Reuters data didn't show anything close, indicating that the offshore dollar/yuan's high for the year was at 6.9650 and the onshore yuan's was at 6.9210.

Sean Yokota, head of Asia strategy at SEB, told CNBC that people were sharing a screenshot on Chinese social media platform WeChat showing a mispricing in Google data showing the dollar was fetching 7.4 yuan.

He noted that China's policymakers would likely want to avoid a devaluation of the currency.

Indeed, analysts have recently noted that policymakers have appeared to slow the yuan's fall against the dollar as the greenback surged since the surprise US election win of Donald Trump.

Similarly, Richard Yetsenga, chief economist at ANZ, told CNBC that while there was a lot of chatter, it would be "quite dramatic" if the 7.48 figure were to turn out to be accurate, but he added that it was hard to imagine at this stage.

The apparent hiccup didn't appear to affect trading in the currency on Tuesday.

The People's Bank of China (PBOC) set the yuan midpoint at 6.8575 against the dollar on Tuesday, suggesting a stronger yuan compared with a fix of 6.887 on Monday.

In onshore trade, the dollar was fetching 6.8654 yuan at 10:23 a.m.

HK/SIN, the Chinese currency's strongest against the greenback since mid-November.

Offshore, the dollar was fetching 6.8691 yuan.

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