MARKET TALK: USD/CNY Swaps Up More On Tight Yuan Liquidity

USD/CNY swaps rise further as yuan liquidity tightens. One-year USD/CNY forex swaps are at a premium of 277 pips, up from a premium of 250 pips. A Guangdong-based foreign bank trader says the swaps market has limited customer flows recently, so the curve is dominated by yuan liquidity conditions for now; but he sees no obvious reason to push yuan funding rates higher. The USD/CNY spot is at 6.3026 vs 6.3000 late Wednesday. Offshore, one-year USD/CNY NDFs are at 6.2870/6.2920 from 6.2785/6.2815 late Wednesday.