China's yuan gains but market fears more weakness
Published on May 14, 2014 12:26 PM
HONG KONG (Reuters) - China's yuan briefly hit a one-week high on Wednesday as some investors used recent weakness in the currency to add positions, though the broader market remained unconvinced the yuan's rise is sustainable.
In a reflection of how expectations towards the Chinese currency have swung in recent weeks, the offshore yuan in Hong Kong was trading near its biggest discount to the onshore rate since the market began in 2010.
Typically, the offshore yuan in Hong Kong trades at a premium to its onshore cousin because of the lack of a deep pool of deliverable yuan assets outside the mainland.
But in recent days, the offshore yuan or CNH as it is commonly known has begun to trade at a discount as some investors have begun to bet on a weaker currency in the backdrop of a spreading slowdown in the economy.
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