Feb. 29 (Bloomberg) -- The yuan advanced the most in three weeks after the People’s Bank of China set the currency’s reference rate at the strongest level on record.
The central bank raised the daily fixing by 0.07 percent to 6.2919 per dollar, the strongest level since a dollar peg ended in July 2005. Oil prices rose 0.5 percent to $107.04 a barrel in New York after sliding 3 percent in the previous two days. Crude reached a nine-month high of $109.95 on Feb. 24. The European Central Bank will probably grant euro-area lenders 470 billion ($633 billion) euros of loans this week, according a Bloomberg News survey, which may spur inflows into emerging markets.
“A record fixing shows that the PBOC is still comfortable with yuan appreciation even though economic growth is slowing,” said Stella Lee, president of Success Futures & Foreign Exchange Ltd. in Hong Kong. The “slide in oil prices also boosted sentiment,” she said.
The yuan strengthened 0.09 percent, the most since Feb. 8, to close at 6.2936 per dollar in Shanghai, extending this month’s gain to 0.24 percent, according to the China Foreign Exchange Trade System. It touched 6.2884 on Feb. 10, the strongest level since the country unified the official and market exchange rates at the end of 1993. The currency is allowed to trade 0.5 percent either side of the reference rate.
In Hong Kong’s offshore market, the yuan advanced 0.1 percent this month to 6.2940 per dollar. It was little changed today. Twelve-month non-deliverable forwards gained 0.07 percent to 6.2822 today, a 0.2 percent premium to the onshore spot rate, according to data compiled by Bloomberg. The contracts were little changed in February.
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