Asian currencies surged on Thursday, with the offshore Chinese yuan jumping to its strongest level in nearly two months, as a spike in funding costs prompted yuan short sellers to square positions.
The offshore yuan climbed to as high as 6.7850 per U.S. dollar, as of 0640 GMT, its strongest level since Nov. 9.
China has stepped into both its onshore and offshore yuan markets to shore up the faltering yuan this week, sparking speculation that it wants a firm grip on the currency ahead of U.S. President-elect Donald Trump’s inauguration on Jan. 20.
Market participants said the surge in the offshore yuan helped spur some scaling back of long U.S. dollar positions and short-covering in Asian currencies.
The move helped to trigger some profit-taking in the dollar by weakening the outflows story from China, said Philip Wee, senior currency economist for DBS Bank.
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