The yuan was little changed before a report tomorrow that’s expected to show the economy expanded in the first quarter at the slowest pace in almost three years.
Gross domestic product rose 8.4 percent from a year earlier following an 8.9 percent increase in the previous three months, according to the median estimate of economists surveyed by Bloomberg. The People’s Bank of China may cut interest rates in the “immediate future” as inflation isn’t too high, Michael Kurtz, chief Asian equity strategist at Nomura Holdings Inc., wrote in a report dated yesterday. The central bank raised the yuan’s reference rate by 0.05 percent to 6.2984 per dollar today, the strongest level since March 30.
“China’s growth is likely to exceed Premier Wen Jiabao’s 7.5 percent target so the risk of a hard landing is low,” said Kenix Lai, a Hong Kong-based currency analyst at Bank of East Asia Ltd. “However, the yuan will trade between 6.30 and 6.3150 in the near-term unless the upcoming economic data could give some positive surprises.”
The yuan closed at 6.3073 per dollar in Shanghai, from yesterday’s close of 6.3081, according to the China Foreign Exchange Trade System. The currency is allowed to move as much as 0.5 percent either side of the daily fixing.
In Hong Kong’s offshore market, the yuan rose 0.04 percent to 6.3060. Twelve-month non-deliverable forwards slipped 0.05 percent to 6.3424, a 0.6 percent discount to the onshore spot rate, according to data compiled by Bloomberg. The yuan’s one-month implied volatility, a measure of exchange-rate swings used to price options, fell five basis points, or 0.05 percentage point, to 2.15 percent.