Yuan Advances on China’s Resilience, Easing Europe Debt Crisis
The yuan is the only currency among the biggest emerging- nations to strengthen against the dollar this quarter and government data in the past week showed the nation’s exports grew 24.5 percent in August from a year earlier. German Chancellor Angela Merkel said yesterday she’s “very optimistic” that Finland’s demands for special collateral as part of a Greek bailout package will be met, easing default speculation that boosted demand for dollars.
“Investors see the yuan as a better investment option as China’s economic growth remains strong despite the turbulence,” said Banny Lam, an economist in Hong Kong at CCB International Securities, a unit of China’s second-biggest lender. “Merkel’s comments also gave people hope that Greece will not default on its debt.”
The yuan gained 0.04 percent to close at 6.3964 per dollar in Shanghai, after climbing as much as 0.12 percent, according to the China Foreign Exchange Trade System. The People’s Bank of China set the daily reference rate 0.06 percent stronger today, boosting it for the first time in three days. The currency
In Hong Kong’s offshore market, the yuan slipped 0.09 percent to 6.3910 per dollar. Twelve-month non-deliverable forwards fell 0.23 percent to 6.3455, losing 0.83 percent in three days. The premium to the onshore spot rate was 0.8 percent, according to data compiled by Bloomberg.
“There’s still some risk aversion in the offshore market and some traders are stopping losses after getting hit in the past few days,” said Carlos Cheung, a Hong Kong-based foreign- exchange dealer at Bank of Communications Ltd.
Premier Wen Jiabao said today Europe’s debt crisis needs to be contained and global economies should address their debt and deficit problems. China’s economy is “generally in good shape” and inflation in the country is generally controllable, he said at the World Economic Forum in Dalian, China.
Inflation slowed to 6.2 percent in August from a three-year high of 6.5 percent in July, official figures show. The Asian Development Bank lowered its 2011 economic growth forecast for China to 9.3 percent from an April estimate of 9.6 percent, according to a report released today. Its projection for Asia excluding Japan was cut to 7.5 percent from 7.8 percent.
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