Yuan forwards completed a second weekly decline before a report that economists predict will show U.S. growth in the last quarter was less than previously forecast, adding to evidence the global recovery is faltering.
The People’s Bank of China set the reference rate for yuan trading at 6.3950 per dollar today, the second consecutive day it has been weakened. The Chinese currency is not ready for rapid appreciation because of the “immaturity” of Asia’s largest economy, Nobel laureate Myron Scholes said in an interview, according to a report published late yesterday by the official Xinhua News Agency.
“The general condition of risk appetite is quite poor at the moment,” said Robert Minikin, a senior foreign-exchange strategist at Standard Chartered Plc in Hong Kong. “We do expect more yuan appreciation, but it may not be forthcoming until the final quarter of this year.”
Twelve-month non-deliverable forwards slid 0.08 percent this week to 6.2934 as of 4:36 p.m. in Hong Kong, according to data compiled by Bloomberg. The contracts were little changed today. The premium to the onshore spot rate was 1.5 percent.
The yuan strengthened 0.1 percent this week and 0.05 percent today to close at 6.3868 per dollar, according to the China Foreign Exchange Trade System. In Hong Kong’s offshore market, the currency was little changed this week and rose 0.03 percent today to 6.3745.
Data to be released today will show the world’s biggest economy grew an annualized 1.1 percent in the second quarter from the previous three months, less than last month’s estimate of 1.3 percent, according to the median estimate of 80 economists in a Bloomberg survey.
Reserve Bank of Australia Governor Glenn Stevens said today the yuan is undervalued using “any objective gauge,” three days after Japan said the Group of 20 nations should discuss the Chinese currency.
“It would be beneficial to the global economy, and indeed beneficial to the Chinese people, for there to be more flexibility,” Stevens said. The Chinese central bank “would do more on this immediately if it were their call, but it isn’t,” he said. “Exchange-rate regimes are a government decision.”
--Judy Chen, Fion Li. Editors: Andrew Janes, James Regan
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