Yuan Advances to Near 19-Year High as PBOC Raises Reference Rate

The yuan climbed to within 0.1 percent of a 19-year high after the People’s Bank of China boosted the currency’s reference rate.

The central bank raised the fixing by 0.09 percent to 6.2360 per dollar today and the spot rate was 0.91 percent stronger than that. A preliminary April reading of 50.5 for a Purchasing Managers’ Index released by HSBC Holdings Plc and Markit Economics was less than the median estimate of 51.5 in a Bloomberg survey. The final PMI for March was 51.6 and a reading of 50 or above indicates expansion.

“Capital is flowing into China on bets the yuan will appreciate and the government will keep delivering stable growth, even though it’s not as strong as expected,” said Kenix Lai, a foreign-exchange analyst at Bank of East Asia Ltd. in Hong Kong.

The yuan gained 0.06 percent to close at 6.1791 per dollar in Shanghai, according to the China Foreign Exchange Trade System. The currency touched 6.1756 earlier. That’s close to 6.1723 reached on April 17, the strongest level since the government unified the official and market exchange rates at the end of 1993.

China’s economy expanded 7.7 percent in the first quarter from a year earlier, slowing from a 7.9 percent growth in the previous three months.

In Hong Kong’s offshore market, the yuan was steady at 6.1778 per dollar, from yesterday’s 6.1780, according to data compiled by Bloomberg. Twelve-month non-deliverable forwards slipped 0.02 percent to 6.2550, trading at a 1.2 percent discount to the spot rate in Shanghai.

One-month implied volatility, a measure of exchange-rate swings used to price options, fell four basis points, or 0.04 percentage point, to 1.41 percent.

To contact the reporter on this story: Fion Li in Hong Kong at fli59@bloomberg.net

To contact the editor responsible for this story: James Regan at jregan19@bloomberg.net

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