The yuan halted a two-day gain as Greek leaders struggled to agree on economic measures needed for a second aid package and Lunar New Year price increases pushed up China’s inflation rate.
Asian currencies weakened after Greek Prime Minister Lucas Papademos and party leaders agreed on all the points of the program except one which required discussion, according to an e-mailed statement from his office. Consumer prices climbed 4.5 percent in January from a year earlier, the National Bureau of Statistics said today. That compares with the 4.1 percent increase in December and the 4 percent median estimate in a Bloomberg survey of economists.
“As the Lunar New Year, which pushes up food prices, happened to be in January this year, investors should wait for February data to get a clearer picture on inflation,” said Banny Lam, a Hong Kong-based economist at CCB International Securities Ltd., a unit of China’s second-largest bank. “The lack of progress in Greece disappoints investors and is bad for market sentiment.”
The yuan closed at 6.2952 per dollar in Shanghai, little changed from yesterday’s 6.2945, according to the China Foreign Exchange Trade System. The People’s Bank of China set the fixing 0.03 percent stronger at 6.3009 per dollar, the highest level since Jan. 4. The currency is allowed to trade 0.5 percent on either side of the daily fixing.
China’s exports probably declined in January, Commerce Minister Chen Deming said in a written response to questions from Bloomberg News today.
In Hong Kong’s offshore market, the yuan declined 0.08 percent to 6.2920. Twelve-month non-deliverable forwards were little changed at 6.2565, a 0.6 percent premium to the onshore spot rate.