The yuan traded in Hong Kong rose to a three-week high after Chinese and U.S. officials stressed the value of cooperation at an annual summit between the nations.
A dialogue would always be more preferable than confrontation, Chinese Vice Premier Wang Yang said at the State Department in Washington on Tuesday as the two-day meeting started. China’s exchange-rate intervention has declined significantly, but the real test will come as the market pushes for gains in the yuan against the dollar, said U.S. Treasury Jacob J. Lew.
“The market expects the officials to discuss the yuan’s exchange rate and China’s capital-account opening during the dialogue,” said Ho Man Chun, a strategist at Bank of Communications Co.’s Hong Kong branch. “Any agreements on these issues will boost market confidence and support the yuan in the long run.”
The offshore yuan reached 6.1998 a dollar, the strongest since June 4, before trading steady at 6.2025 as of 4:38 p.m. in Hong Kong, according to data compiled by Bloomberg. The People’s Bank of China cut its daily reference rate, by 0.04 percent to 6.1142.
The onshore yuan closed unchanged from Tuesday at 6.2071 a dollar in Shanghai, China Foreign Exchange Trade System prices show. The gap between the currency and the fixing was 1.5 percent, within the 2 percent limit. The yuan has been little changed against the dollar this year, after falling 2.4 percent in 2014.
The yuan’s exchange rate is at a “fairly reasonable” level, while the U.S. still has “quite a large trade deficit” with China and believes the exchange rate is “not quite right,” PBOC Governor Zhou Xiaochuan said in Washington.
— With assistance by Tian Chen