Forward contracts on the yuan climbed the most in more than three months as China raised the onshore currency’s fixing amid indications the authorities have succeeded in steadying the stock market.
The Shanghai Composite Index advanced for a fifth day, the longest stretch of gains since May, or before the rout that wiped almost $4 trillion off the market. Economic growth will be slightly higher than 7 percent this year, Zhang Liqun, a researcher at the State Council’s Development Research Center, wrote in an article. Gross domestic product expanded 7 percent in the second quarter, matching the government’s goal for 2015.
“The market is more optimistic as wild fluctuations in the stock market seem to have ended and the economic recovery is well on track,” said Liu Xuezhi, a Shanghai-based macro-economy analyst at Bank of Communications Co. “China will maintain a loose monetary policy to spur the economy in the second half.”
Twelve-month non-deliverable forwards on the yuan gained 0.2 percent, the most since April 16, to 6.2503 a dollar as of 5:06 p.m. in Hong Kong, data compiled by Bloomberg show.
The onshore yuan, which is constrained by a daily central bank fixing, closed unchanged at 6.2095 in Shanghai, according to China Foreign Exchange Trade System prices. The offshore rate in Hong Kong, where trading is free, dropped 0.02 percent to 6.2116, data compiled by Bloomberg show.
The People’s Bank of China strengthened the yuan’s reference rate by 0.05 percent, the most since June 30, to 6.1168 a dollar. The gap between the onshore spot rate and the fixing was 1.5 percent, within the 2 percent limit.
— With assistance by Tian Chen