The yuan advanced for a second day on speculation reports on factory output and trade will add to evidence that a slowdown in the world’s second-largest economy is bottoming out.
The People’s Bank of China raised the yuan’s daily fixing for the first time in three days ahead of data next week that may show exports and industrial production increased in August, according to separate Bloomberg surveys. The official manufacturing Purchasing Managers’ Index jumped to a 16-month high in August, according to a report on Sept. 1.
“Domestic economic indicators are a bit more stable,” said Suan Teck Kin, an economist in Singapore at United Overseas Bank Ltd. “The appreciation path for the renminbi is continuing despite what’s happening in the emerging-market space.”
The currency was at 6.1199 per dollar in Shanghai, compared with 6.1201 yesterday, China Foreign Exchange Trade System prices showed. It rose as high as 6.1184 earlier. The PBOC raised the yuan’s reference rate by 0.05 percent to 6.1696 per dollar. The currency is allowed to diverge a maximum 1 percent from the fixing.
The yuan has appreciated 1.8 percent this year, the only currency showing a gain among 24 emerging-market exchange rates tracked by Bloomberg.
Twelve-month non-deliverable forwards fell 0.04 percent to 6.2362 per dollar in Hong Kong, according to data compiled by Bloomberg. The contracts earlier reached 6.2295, the highest since May 29, and last traded at a 1.9 percent discount to the onshore spot rate.
China’s growth is still unbalanced as wealth management products and trust businesses bring systemic risks, Hu Xiaolian, the central bank’s deputy governor, said at a conference in Beijing today. China must enhance coordination between monetary policy and regulatory policies, Hu said.
In Hong Kong’s offshore market, the yuan traded at 6.1138 per dollar, compared with 6.1137 yesterday, according to data compiled by Bloomberg. One-month implied volatility in the onshore yuan, a measure of expected moves in the exchange rate used to price options, fell three basis points, or 0.03 percentage point, to 1.05 percent.
Sheng Songcheng, head of PBOC’s statistics and analysis department, said conditions and timing are gradually maturing for China to accelerate the opening of the yuan’s capital account, China Securities Journal reported today. The U.S. is ready to stop its monetary-stimulus policy and this may bring changes to global money flows, according to Sheng.