China’s yuan rose against the dollar ahead of a meeting of European finance ministers to discuss expanding the region’s bailout fund to curb the debt crisis.
The People’s Bank of China, which manages the exchange rate using a basket of currencies of major trading partners, set the yuan rate 0.1 percent higher at 6.6515 against the dollar, stronger for a third day. Belgian Finance Minister Didier Reynders said Dec. 4 the $1 trillion fund may be increased if ministers decide to introduce a larger permanent facility.
“Europe will continue to be the dominant issue,” said Patrick Perret-Green, head of Asian foreign-exchange strategy at Citigroup Inc. “The yuan has only appreciated mildly compared to the bounce of other currencies against the dollar.”
The yuan rose 0.2 percent to 6.6484 per dollar as of 5:44 p.m. in Shanghai, according to the China Foreign Exchange Trade System.
Twelve-month non-deliverable forwards fell 0.2 percent to 6.5045, reflecting bets the yuan will strengthen 2.2 percent in a year, according to data compiled by Bloomberg.
The yuan was supported earlier by a stronger euro as concerns about the debt crisis eased after European Central Bank President Jean-Claude Trichet challenged the region’s political leaders last week to do more to fix their budgets.
China should continue to increase the yuan’s flexibility to curb inflationary pressure, Ji Min and Wu Chaoming, two officials at the central bank’s research bureau, wrote in a commentary in the China Finance published by the People’s Bank of China.