* Graphic: World FX rates in 2020 https://tmsnrt.rs/2RBWI5E
By Hideyuki Sano
TOKYO, Oct 12 (Reuters) - The dollar inched up in early
Monday trade as riskier currencies slipped after negotiation on
a U.S. stimulus package ran into resistance and as the yuan
dropped after China's central bank took a measure seen as aimed
at curbing its strength.
The euro slipped 0.15% to $1.1818 EUR= while the
Australian dollar shed 0.25% to $0.7223 AUD=D4 .
The yen was little changed at 105.65 to the dollar JPY= .
The U.S. dollar index edged up to 93.104 =USD , bouncing
back from Friday's near-three-week low of 92.997. The index saw
its biggest loss in six weeks on Friday on hopes that a deal for
new U.S. stimulus would be reached.
President Donald Trump on Friday offered a $1.8 trillion
coronavirus relief package in talks with House Speaker Nancy
Pelosi - moving closer to Pelosi's $2.2 trillion proposal.
But Trump's offer drew criticism from several Senate
Republicans, many of whom are uneasy about the nation's growing
debt and concerned a deal would cost Republicans support in the
upcoming presidential election, denting the risk-on mood.
Still, with Nov. 3 election only weeks away, investors bet
that Democrat Joe Biden is more likely to win the U.S.
presidency and offer a larger economic package.
"On the whole, the big picture has not changed that much,"
said Kyosuke Suzuki, director of forex at Societe Generale.
FORWARD THINKING
The offshore Chinese yuan dropped after the People's Bank of
China (PBOC) said it will lower the reserve requirement ratio
for financial institutions when conducting some foreign exchange
forwards trading. Analysts said the measure could keep the yuan's strength in
check by encouraging the use of forwards.
"The authorities have not stood in the way of yuan strength,
but this move could be seen as a sign that they want to slow the
pace of appreciation," wrote Khoon Goh, head of Asia Research at
ANZ in Singapore.
"Our interpretation is that removing the reserve requirement
is intended to encourage firms to hedge in order to manage
currency risk. It also enhances the foreign exchange market
structure by making it easier for foreign investors to hedge
their onshore portfolio investments."
The yuan hit a 17-month high on Friday, both in onshore and
offshore trade, having gained more than 6% against the dollar
since late May largely driven by a favourable yield differential
between China and other major economies.
The yuan last traded at 6.7301 per dollar in offshore trade
CNH=D4 , down 0.6%.
Elsewhere, sterling traded at $1.3035 GBP=D4 , having
reached a one-month high of $1.3050 on Friday on guarded
optimism about Brexit negotiations ahead of a European Union
summit this week.