China Yuan Climbs to 19-Year High on Record Fixing, Export Data

The yuan rose to a 19-year high as the central bank strengthened the daily fixing to a record and Chinese exports topped analysts’ estimates.

The currency completed its biggest two-day gain in 15 months as an official report showed overseas sales rose 14.7 percent in April from a year earlier, beating the 9.2 percent median forecast in a Bloomberg survey and March’s 10 percent gain. The People’s Bank of China raised the daily reference rate 0.17 percent to a record 6.1980 per dollar. The currency can diverge a maximum 1 percent from the fixing.

The yuan rose 0.21 percent to 6.1410 per dollar in Shanghai, taking the two-day gain to 0.42 percent, the most since Jan. 31, 2012, according to the China Foreign Exchange Trade System. The currency touched 6.1396 earlier, the strongest level since the government unified official and market exchange rates at the end of 1993.

“The size of capital inflows into China and onshore demand for the yuan continue to dominate,” said Khoon Goh, a strategist at Australia & New Zealand Banking Group Ltd. in Singapore. “I still expect further near-term appreciation pressure.”

Yuan positions at Chinese financial institutions stemming from foreign-exchange transactions, a gauge of cross-border capital flows, climbed 236 billion yuan ($38 billion) in March, central bank data show. Gains are a sign of inflows, and the positions increased 1.22 trillion yuan in the first three months of this year.

Five-Year Plan

China may introduce a five-year plan for yuan capital-account convertibility this year, China Securities Journal reported today, citing Chen Bingcai, a former deputy chief at State Administration of Foreign Exchange’s capital account management department. The yuan’s capital account may be convertible by 2020, the report said.

In Hong Kong, the yuan gained 0.25 percent to 6.1414 per dollar, according to data compiled by Bloomberg. Twelve-month non-deliverable forwards advanced 0.29 percent to 6.21, a 1.1 percent discount to the onshore exchange rate. One-month implied volatility in the yuan, a measure of expected moves in the exchange rate used to price options, increased 26 basis points, or 0.26 percentage point, to 1.76 percent.

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