Asian shares rebounded on Friday, led by strong gains for beaten Chinese stocks after China suspended its market circuit breaker and set a stronger midpoint rate for trading of the yuan for the first time in nine days.
Friday's advances seemed to reduce some of the concerns that have hit global markets but Asian shares were still on track for their biggest weekly fall in more than four months.
China’s circuit breaker had been triggered twice during the week and was suspended late Thursday with China claiming that the system failed to reduce market volatility and some market players even claiming it backfired.
The CSI300 of major Shanghai and Shenzhen stocks was up 2.7 percent and the Shanghai Composite climbed 2.4 percent, shrinking losses for the week for both to less than 10 percent.
POBC Fixes Yuan Higher
China's central bank guided the yuan a shade higher Friday setting the yuan reference rate at 6.5636 against the dollar, up 0.02 percent from Thursday's fix and higher than the yuan's closing rate of 6.5929 in onshore trading on Thursday.
According to Claudio Piron, emerging Asia fixed income and currency strategist at Bank of America Merrill Lynch, "We're seeing a little bit of a relief rally but I think the impact should be short-lived, a couple of days maybe. The mid-term outlook for the yuan is still weak given the capital outflows and the slowdown in the economy."
Friday’s fix was the first time in nine days that the PBOC set the yuan reference rate higher and it helped mainland stock markets recover, with Chinese equities climbing more than 2 percent.