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Yuan Rises After Growing Manufacturing, Europe Concerns Ease

Dec. 1 (Bloomberg) -- China’s yuan advanced, paring earlier losses, after a government report showed the nation’s manufacturing accelerated at the fastest pace in seven months in November, pointing to higher interest rates.

The People’s Bank of China set the reference rate for yuan trading at 6.6786 per dollar today, 0.04 percent weaker than yesterday’s level. China’s Purchasing Managers’ Index rose to 55.2 from 54.7 in October, according to the nation’s logistics federation today. That’s more than the 54.8 median estimate of 14 economists surveyed by Bloomberg News.

“The yuan is being supported by strong PMI data,” said Dariusz Kowalczyk, an economist at Credit Agricole CIB. “The new export order component even showed that exports weren’t dented by an appreciating currency.”

The Chinese currency rose 0.05 percent to 6.6634 per dollar as of 5:33 p.m. in Shanghai, after weakening to 6.6774 against the greenback earlier today, according to the China Foreign Exchange Trade System.

Twelve-month non-deliverable forwards gained 0.5 percent to 6.5185 against the dollar, reflecting bets the renminbi will gain 2.2 percent in a year, according to data compiled by Bloomberg.

“There’s better sentiment globally with less risk aversion,” said Hong-Kong based Kowalczyk.

The euro rose on speculation European policy makers will signal their willingness to take more steps to contain the debt crisis. The MSCI Asia Pacific Index added 1.1 percent to 130.12 at 5 p.m. in Tokyo.

The U.S. Dollar Index traded on ICE futures in New York, which tracks the currency against those of six trading partners, fell for the first time in four consecutive days, by 0.4 percent

China’s one-year lending and deposit rates were boosted by a quarter of a percentage point on Oct. 19, the first increases since 2007.

To contact Bloomberg News staff for this story: Sonja Cheung in Hong Kong at scheung58@bloomberg.net.

To contact the editor responsible for this story: Sandy Hendry at shendry@bloomberg.net.

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