March 1 (Bloomberg) -- The yuan snapped a two-day gain as the central bank weakened the daily fixing by the most in six weeks after Federal Reserve Chairman Ben S. Bernanke failed to signal new measures to stimulate the world’s largest economy.
The People’s Bank of China set the reference rate 0.15 percent weaker at 6.3016 per dollar, retreating from a record. The Dollar Index gained as Bernanke affirmed yesterday interest rates are likely to stay low at least through late 2014 without offering any indication that further monetary easing is under consideration. A government-backed report showed China’s manufacturing improved for a third straight month.
“The fixing reflects a rebound in the greenback as another round of quantitative easing looks unlikely now,” said Kenix Lai, a currency analyst at Bank of East Asia Ltd. in Hong Kong. “China’s manufacturing data should be good news but investors might want to look for another month of data to confirm the recovery trend.”
The yuan fell 0.1 percent, the most since Feb. 6, to close at 6.3002 per dollar in Shanghai, according to the China Foreign Exchange Trade System. The currency is allowed to trade 0.5 percent either side of the reference rate.
In Hong Kong’s offshore market, the yuan slipped 0.03 percent to 6.2975. Twelve-month non-deliverable forwards declined 0.06 percent to 6.2868, a 0.2 percent premium to the onshore spot rate, according to data compiled by Bloomberg.
China’s purchasing managers’ index rose to 51.0 from 50.5 in January, official data showed today. The reading compares with the median 50.9 estimate in a Bloomberg News survey of 24 economists. A number above 50 indicates expansion.
The PBOC reiterated it will improve the yuan exchange rate mechanism and steadily promote yuan capital account convertibility this year, according to a statement posted on its website yesterday.
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