Jan. 15 (Bloomberg) -- China’s yuan approached its strongest level in 19 years ahead of data forecast to show the world’s second-largest economy halted a seven-quarter slowdown.
Gross domestic product expanded 7.8 percent in the three months ended Dec. 31 from a year earlier, compared with a 7.4 percent increase in the previous quarter, according to the median estimate of 53 analysts in a Bloomberg News survey before figures due Jan. 18. The People’s Bank of China raised the yuan’s reference rate by 0.01 percent to 6.2691 per dollar today. The currency is allowed to trade as much as 1 percent on either side of the daily fixing.
“The yuan will continue to head higher but the moves will be modest ahead of key data at the end of the week,” said Khoon Goh, a senior strategist in Singapore at Australia & New Zealand Banking Group Ltd. “The fixing has been fairly steady.”
The yuan rose 0.09 percent to 6.2136 per dollar in Shanghai, according to the China Foreign Exchange Trade System. The currency reached 6.2124 yesterday, the strongest level since the government unified official and market exchange rates at the end of 1993.
One-month implied volatility, a measure of expected moves in exchange rates used to price options, slipped five basis points, or 0.05 percentage point, to 1.60 percent, according to data compiled by Bloomberg. In Hong Kong’s offshore market, the yuan fell 0.11 percent to 6.1905 per dollar.
Twelve-month non-deliverable forwards slipped 0.05 percent to 6.2840 per dollar in Hong Kong, a 1.1 percent discount to the onshore spot rate, according to data compiled by Bloomberg.
The yuan may strengthen less than 3 percent this year, according to a front-page commentary in today’s China Securities Journal, citing unidentified analysts as saying. The Chinese economy may grow more than 7.5 percent, the newspaper said.
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