Yuan Forwards Climb to Two-Month High on PBOC Fixing, China PMI

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Yuan forwards rose to a two-month high after China’s central bank boosted the currency’s reference rate and two manufacturing gauges beat estimates.

The People’s Bank of China raised the daily fixing 0.06 percent to 6.1396 a dollar, ending a four-day decrease of 0.1 percent. The official Purchasing Managers’ Index was 50.1, data released Wednesday showed, more than the median estimate of 49.7 in a Bloomberg survey and up from February’s reading of 49.9. Numbers above 50 indicate expansion. A private manufacturing PMI also exceeded expectations, while indicating a contraction.

“Looking at the fixings, we could see China is in favor of a stable exchange rate, and sharp depreciation isn’t on the table,” said Tommy Xie, a Singapore-based economist at Oversea-Chinese Banking Corp. “The PMIs were better than expected and have shown improvement. However, the economic outlook is still uncertain.”

Twelve-month yuan non-deliverable forwards climbed 0.33 percent to 6.3217 a dollar as of 4:47 p.m. in Hong Kong, data compiled by Bloomberg show. The contracts touched 6.3175 earlier, the strongest level since Jan. 23. The yuan rose 0.02 percent to close at 6.1970 in Shanghai, extending a four-day advance to 0.32 percent, China Foreign Exchange Trade System prices show. The gap between the onshore spot rate and the fixing was 0.93 percent, within the 2 percent limit.

In Hong Kong’s offshore market, the currency strengthened 0.05 percent to 6.2034 versus the greenback, data compiled by Bloomberg show.

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