Yuan Climbs a Second Week After Exports Gain as Dollar Retreats

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The yuan completed a second weekly advance after China’s exports beat estimates and the greenback continued to retreat.

The Bloomberg Dollar Spot Index has fallen 1.7 percent since reaching this year’s high on Oct. 3 amid signs the U.S. will push back its timetable for raising interest rates. The Chinese currency touched a seven-month high yesterday after the government reported Oct. 13 that overseas sales rose 15.3 percent in September from a year earlier. That was the biggest increase since February 2013 and topped the 12 percent median estimate in a Bloomberg survey.

“The gain is largely a reflection of the dollar’s weakness,” said Suan Teck Kin, an economist at United Overseas Bank Ltd. in Singapore. “Export growth was also an encouragement to the market,” he said, adding that he expected the yuan to stay on a “stable appreciation path.”

The yuan climbed 0.11 percent this week to 6.1240 per dollar in Shanghai, China Foreign Exchange Trade System prices show. It declined 0.01 percent today after touching 6.1209 yesterday, the strongest since March 7. The central bank cut the reference rate 0.02 percent to 6.1407 today, compared with 6.1470 on Oct. 10. The yuan traded 0.27 percent stronger than the fixing, within the 2 percent limit.

St. Louis Federal Reserve Bank President James Bullard said yesterday the central bank should consider delaying the end to its bond-buying program as slowing growth in the rest of the world may weigh on the U.S. recovery.

‘Significantly Undervalued’

China has shown “some renewed willingness” to let the yuan rise, the U.S. Treasury said this week in its twice-yearly report to Congress on foreign exchange, while adding that the currency “remains significantly undervalued.” China’s foreign-exchange stockpile fell 2.6 percent to $3.89 trillion in September, according to official data released yesterday.

In Hong Kong, the yuan jumped 0.21 percent today, the most since Oct. 6, to 6.1386 per dollar, according to data compiled by Bloomberg. The currency gained 0.05 percent this week.

Twelve-month non-deliverable forwards fell 0.26 percent this week to 6.2557 per dollar in Hong Kong, trading 2.1 percent weaker than the Shanghai spot rate, according to data compiled by Bloomberg. The contracts fell 0.05 percent today. One-month implied volatility in the onshore yuan, a measure of expected swings used to price options, rose two basis points today and this week to 1.95 percent.

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