China’s yuan had the biggest weekly gain since May amid signs the government will keep opening up its economy to foreign investors.
The liberalization of financial markets will be accelerated, People’s Bank of China Governor Zhou Xiaochuan said at a meeting in Beijing on Thursday. China wants to boost global use of the yuan to support its case to have the International Monetary Fund add it to a basket of reserve currencies at a review in November. The official Purchasing Managers’ Index released Wednesday showed manufacturing expanded for a fourth month in June.
The yuan gained 0.06 percent this week, the most since the period ended May 22, to close at 6.2057 a dollar in Shanghai, China Foreign Exchange Trade System prices show. The currency was little changed on Friday. The PBOC set its daily reference rate at 6.1160, 0.04 percent weaker than on June 26. The gap between the spot rate and the fixing was 1.5 percent, within the 2 percent limit.
“The PBOC’s aim to open up financial markets will benefit its ambition to have the IMF grant the yuan reserve status, which will support the currency in the near term,” said Zhu Lixu, a Shanghai-based analyst at Xiangcai Securities Co. “The economy will pick up further in the second half as the government’s stimulus measures take effect.”
China cut interest rates for the fourth time since November over the weekend in an attempt to revive an economy that grew at the slowest pace since 2009 in the first quarter.
Authorities will keep improving the framework for monetary policy and promote financial reform, the PBOC’s Zhou said on Thursday, according to a statement on its website.
The offshore yuan in Hong Kong, which trades freely, was steady this week and dropped 0.04 percent Friday to 6.2054 a dollar, according to data compiled by Bloomberg.
— With assistance by Tian Chen