The offshore yuan in Hong Kong rose for the first time in four days as the central bank’s daily fixing spurred speculation that it wants the currency to be stable during President Xi Jinping’s first state visit to the U.S.
The People’s Bank of China set the yuan’s reference rate 0.08 percent stronger than Wednesday’s onshore closing price even as the Bloomberg Dollar Spot Index advanced overnight. The authority intervened in both the Hong Kong and Shanghai markets to prop up the yuan on Wednesday, according to a person familiar with the matter. China won’t devalue the yuan to boost exports, Xi said in a speech in Seattle, adding that there’s no basis for continuous depreciation.
“The fixing’s a signal from the PBOC that the authorities won’t tolerate sharp depreciation of the currency,” said Sean Callow, a foreign-exchange strategist at Westpac Banking Corp. “It also helps keep the yuan stable during Xi’s visit and keeps the currency out of global headlines."
The freely-traded offshore yuan climbed 0.11 percent to 6.4251 a dollar as of 5:02 p.m. in Hong Kong, according to data compiled by Bloomberg, halting a 0.7 percent three-day drop. The onshore yuan in Shanghai, which can diverge from the PBOC’s reference rate by a maximum 2 percent, closed little changed at 6.3828, China Foreign Exchange Trade System prices show.
The government will cut its economic expansion target to between 6.5 percent and 7 percent for 2016, according to eight of 15 economists in a Bloomberg News survey conducted Sept. 17-22. Four said they expect a 6.5 percent goal, down from the official 7 percent target. China’s manufacturing is contracting at the fastest pace in six years, a preliminary Purchasing Managers’ Index showed on Wednesday.
— With assistance by Tian Chen