The yuan rose to a 19-year high after the People’s Bank of China set the currency’s reference rate at the strongest level since Jan. 15 amid U.S. Treasury Secretary Jacob L. Lew’s visit to Beijing for talks.
The central bank boosted the yuan’s fixing by 0.07 percent to 6.2716 per dollar today. Lew, who has pledged to press China to adopt a market-determined exchange rate, will have separate meetings with Premier Li Keqiang and PBOC Governor Zhou Xiaochuan. The greenback rose against the euro today as investors sought havens after the Cypriot parliament voted down a bank-deposit levy needed to secure a bailout.
“It may be because the U.S. Treasury Secretary is in Beijing,” said Andy Ji, a foreign-exchange strategist in Singapore at Commonwealth Bank of Australia. (CBA) “If you look at the U.S. dollar move, naturally the fixing should be for a stronger dollar.”
The yuan gained 0.05 percent to 6.2127 as of 10:53 a.m. in Shanghai, prices from China Foreign Exchange Trade System show. It touched 6.2120 today, the strongest level since the government unified the official and market rates at the end of 1993. China limits the currency’s movement to 1 percent on either side of the daily fixing.
Lew, who succeeded Timothy F. Geithner, last month cited “progress” by China on the currency and said more needs to be done. He met Chinese President Xi Jinping yesterday and discussed the exchange rate, the global economy and the situation in Cyprus among various issues during the 45-minute meeting, according to a U.S. official who asked not to be identified.
In Hong Kong’s offshore market, China’s currency was little changed at 6.2097 per dollar, data compiled by Bloomberg show. Twelve-month non-deliverable forwards slipped 0.05 percent to 6.3138 in Hong Kong, according to data compiled by Bloomberg. The contracts traded at a 1.6 percent discount to the spot rate in Shanghai.
One-month implied volatility in the onshore yuan, a measure of expected moves in the exchange rate used to price options, fell one basis point, or 0.01 percentage point, to 1.25 percent.
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