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China Yuan Touches 19-Year High as December Exports Seen Rising

Jan. 9 (Bloomberg) -- China’s yuan touched a 19-year high and forward contracts advanced for a third day before a report that is forecast to show exports from Asia’s largest economy picked up last month.

Overseas sales rose 5 percent from a year earlier, after increasing 2.9 percent in November, according to the median estimate in a Bloomberg survey before data due tomorrow. Growth will probably exceed 8 percent this year, compared with a 7.5 percent expansion target for 2012, and new yuan lending of more than 9 trillion yuan ($1.4 trillion) will be “enough to support” that, Chen Yulu, president of Renmin University of China and an adviser to the central bank, said yesterday.

“The market is quite optimistic about reform and the economy is improving,” said Bruce Yam, a currency strategist at Sun Hung Kai Financial Ltd. in Hong Kong. “More money is coming to China, which is a good investment choice given global monetary easing.”

The yuan closed at 6.2262 per dollar in Shanghai, compared with 6.2241 yesterday, according to the China Foreign Exchange Trade System. It touched 6.2216, the highest level since the government unified the official and market exchange rates at the end of 1993.

The currency rose 0.07 percent to 6.2020 in Hong Kong’s offshore market and touched 6.1985, the highest level in data compiled by Bloomberg going back to August 2010.

The People’s Bank of China weakened the reference rate by 0.02 percent to 6.2814. The currency is allowed to trade as much as 1 percent on either side of the daily fixing.

Economic growth slowed for a seventh quarter in the three months through September, expanding by 7.4 percent from a year earlier.

Freer Usage

Twelve-month non-deliverable forwards advanced 0.13 percent to 6.2985 per dollar, a 1.2 percent discount to the onshore spot rate, according to data compiled by Bloomberg. The contract reached 6.2950 earlier, the strongest level since Nov. 13.

Authorities may soon announce details for cross-border yuan loans in Qianhai, an area near Hong Kong, China Securities Journal reported today. China designated the zone as a test ground for freer yuan usage and capital-account convertibility, the National Development and Reform Commission said in June.

One-month implied volatility in the yuan, a measure of expected moves in exchange rates used to price options, increased three basis points, or 0.03 percentage point, to 1.48 percent, according to data compiled by Bloomberg.

To contact the reporters on this story: Lilian Karunungan in Singapore at lkarunungan@bloomberg.net; Kyoungwha Kim in Singapore at kkim19@bloomberg.net

To contact the editor responsible for this story: James Regan at jregan19@bloomberg.net

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