Yuan Little Changed as World Bank Warns of Euro-Area Crisis Risk
The yuan was little changed as the World Bank warned Europe’s debt crisis is increasing risks for emerging-market economies, after the Chinese central bank cut interest rates to shore up growth.
The Washington-based lender predicted China’s gross domestic product will rise 8.2 percent this year and 8.6 percent in 2013, compared with January estimates of 8.4 percent and 8.3 percent, respectively. Asian stocks advanced after the European Central Bank said a Spain bailout will help bolster financial stability in the euro area.
“It’s a bit of a non-event day” with stocks rising modestly, said Sacha Tihanyi, a strategist at Scotiabank in Hong Kong, a unit of Bank of Nova Scotia. (BNS) “With the uncertainty in China and the ongoing grind in the euro zone, I don’t see any real thrust for yuan appreciation at this point.”
The yuan closed at 6.3691 per dollar in Shanghai, compared with 6.3703 yesterday, according to the China Foreign Exchange Trade System. It touched this year’s low of 6.3783 on May 31.
China’s central bank reduced its one-year lending and deposit rates by a quarter of a percentage point to 6.31 percent and 3.25 percent, respectively, on June 8. The economy expanded 8.1 percent in the first quarter from a year earlier, the slowest pace in almost three years.
The People’s Bank of China fixed the currency’s reference rate 0.03 percent stronger at 6.3271 today. The yuan is allowed to trade as much as 1 percent on either side of the daily fixing. In Hong Kong’s offshore market, the yuan gained 0.01 percent to 6.3698. Twelve-month non-deliverable forwards were little changed at 6.4213, a 0.8 percent discount to the onshore spot rate.
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