Investing.com -- Most Asian currencies rose on Thursday as a rebound in the dollar paused, while the Chinese yuan shot up amid reports of government intervention to support the battered currency.
The yuan surged 0.7%, with a Reuters report stating that China’s biggest state-owned banks were seen selling dollars for yuan in the offshore spot market in early trade.
The People’s Bank of China also kept its benchmark loan prime rate on hold on Thursday, and loosened a cross-border financing rule that is expected to ease pressure on the yuan.
The currency was among the best performing Asian units for the day, with the offshore yuan also strengthening about 0.7% to the dollar. Reported intervention by the Chinese government comes as signs of slowing economic growth in China weighed on the yuan this week.
Data released on Monday showed that China’s economy barely grew in the second quarter.
Concerns over China had pulled most Asian currencies lower this week, even as the government vowed more fiscal support for a slowing economic recovery. But Asian currencies recovered some lost ground on Thursday.
The Japanese yen rose 0.3% after coming close to hitting the 140 level against the dollar in overnight trade. The currency was also supported by data showing that Japan logged an unexpected trade surplus in June.
The South Korean won rose 0.2%, while the Indian rupee rose 0.1%.
Australian dollar rallies as labor data cheers RBA hawks
The Australian dollar surged 0.8% on Thursday, reversing three sessions of losses as data showed the country’s labor market grew more than expected in June.
Strength in the labor market factors into higher consumer inflation, which gives the Reserve Bank more cause and space to keep raising interest rates - a scenario that bodes well for the Australian currency.
While the bank had kept rates steady, the minutes of the RBA meeting released this week showed that it was still considering more rate hikes, given sticky inflation levels and a robust jobs market.
U.S. dollar steadies, Fed awaited
The U.S. dollar retreated slightly in Asian trade after marking a strong rebound in the past three sessions. The dollar index and dollar index futures fell about 0.2% each.
Traders began building positions in the dollar ahead of a Federal Reserve meeting next week, with the central bank widely expected to raise rates by 25 basis points.
But focus remains largely on whether the Fed will signal an extended pause in its rate hike cycle, given recent softness in U.S. inflation.