KUALA LUMPUR, Dec 5 (Bernama) -- Bursa Malaysia closed lower on Friday amid mixed regional market performance as investors turned cautious over a possible rate hike by the Bank of Japan (BOJ) and upcoming US economic data that may influence the Federal Reserve’s (Fed) interest rate decision next week. At 5 pm, the FTSE Bursa Malaysia KLCI (FBM KLCI) pared most earlier losses to settle 4.55 points easier, or 0.28 per cent, to 1,616.52 from Thursday’s close of 1,621.07. The benchmark index, which opened 0.37 of-a-point lower at 1,620.70, moved between 1,609.67 and 1,621.25 throughout the day. The broader market was negative, with decliners outpacing advancers 604 to 439. A total of 550 counters were unchanged, 1,151 untraded, and 18 suspended. Turnover declined to 3.17 billion units worth RM2.24 billion from 4.48 billion units worth RM2.75 billion yesterday. Rakuten Trade Sdn Bhd vice-presiden...
The People’s Bank of China (PBOC) set the yuan’s daily reference rate at 7.1161 per dollar on Monday, its strongest level since November and the biggest upward adjustment since January, after the greenback weakened on Federal Reserve Chair Jerome Powell’s dovish Jackson Hole remarks.
The fixing came in stronger than Friday’s 7.1321, signaling Beijing’s intent to stabilise the currency even as macro headwinds weigh on growth.
Market Reaction
Onshore yuan (CNY): Strengthened 0.1% to 7.1605/USD, its highest since late July.
Offshore yuan (CNH): Also gained, with FX traders interpreting the aggressive fixing as stronger-than-expected, given the modest USD weakness.
Bloomberg Dollar Spot Index: Fell 0.8% following Powell’s speech, reinforcing yuan momentum.
However, the yuan still weakened against a basket of peers, according to Bloomberg’s CNY index, underscoring that the move was primarily USD-driven rather than a broad-based strengthening.
Strategist Views
Eddie Cheung (Credit Agricole CIB): Noted the yuan’s broader weakness, cautioning that breaking below 7.15 would still require further USD downside.
Mark Cranfield (MLIV): Said FX traders viewed Monday’s fixing as “surprisingly aggressive,” given the scale of Friday’s dollar move.
Policy Context
The fixing highlights the PBOC’s delicate balancing act:
Support stability: A stronger fixing reflects efforts to anchor market expectations and curb excessive depreciation pressure.
Growth concerns: With China’s economy facing weak demand, deflationary pressures, and rising geopolitical risks, policymakers remain cautious about allowing excessive FX volatility.
Geopolitical backdrop: Yuan stability is seen as critical amid trade frictions and heightened US-China tensions.
Investment Takeaways
FX Markets: Short-term yuan stability looks supported by Powell’s dovish pivot, but broad weakness against peers suggests lingering structural headwinds.
Rates & Policy: Stronger fixings may limit capital outflows, but without firmer growth measures, the yuan’s strength may prove fragile.
Key Watchpoint: Upcoming US inflation data and PBOC liquidity operations will determine whether the yuan can sustain gains below 7.12/USD.
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