China Yuan Strengthens as Dollar Weakens on Ireland Bailout
China’s yuan climbed, reversing earlier losses, on speculation Ireland’s 85 billion euro ($113 billion) aid package will boost the outlook for global economic growth.
The U.S. Dollar Index traded on ICE futures in New York, which tracks the currency against those of six trading partners, declined as much as 0.4 percent. The People’s Bank of China set the reference rate for yuan trading at 6.67 per dollar today, 0.22 percent weaker than Nov. 26 and the biggest daily decline since Oct. 27.
“The yuan’s rebound is due to the dollar’s weakness,” said Zhao Qingming, a senior analyst in Beijing at China Construction Bank Corp., the country’s second-largest lender. “It shows the central bank is managing the yuan against a basket of currencies.”
The Chinese currency fell 0.1 percent to 6.6606 per dollar as of 5:30 p.m. in Shanghai, according to the China Foreign Exchange Trade System. It earlier declined to 6.6770, the weakest level since Nov. 9.
Twelve-month non-deliverable forwards gained 0.34 percent to 6.5441 per dollar, reflecting bets the yuan will gain 1.8 percent in a year, according to data compiled by Bloomberg.
German Foreign Minister Guido Westerwelle said in a speech on Nov. 26 that China should continue allowing its currency to strengthen.
“It is in the interest of both the country itself and its partners in trade that the exchange rate properly reflects the strength of a country’s economy,” he said in Hamburg, Germany.
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