- Yuan isn’t strictly pegged to basket, PBOC's Yi Gang says
- Central bank raises daily reference rate most since Feb. 15
The yuan rose to a two-week high as China’s leaders signaled support for the currency before their biggest gathering of the year begins tomorrow.
The nation’s currency and monetary policies will remain stable, People’s Bank of China Deputy Governor Yi Gang said in Beijing on Friday. The Shanghai Securities News cited him as saying that while the exchange rate references a group of currencies, it isn’t “strictly” pegged to that basket.
The yuan rose 0.28 percent to 6.5166 a dollar as of 7:05 p.m. in Shanghai, according to China Foreign Exchange Trade System prices. It advanced to 6.5099 earlier, the strongest level since Feb. 16. The currency traded in Hong Kong climbed 0.16 percent to 6.5122. The central bank raised its daily reference rate by 0.2 percent, the most in almost three weeks.
"The currency move is likely a psychological reaction to the National People’s Congress because the market is expecting to hear more comments from top officials stressing the importance of financial stability, curbing outflows and encouraging inflows," said Tommy Ong, managing director for treasury and markets at DBS Hong Kong Ltd. "It’s unlikely to be any intervention."
The central bank looks at currency supply, movement in the currency basket and the managed floating exchange-rate regime, Yi was cited as saying. A Bloomberg replica of the CFETS RMB Index, which measures the yuan against 13 exchange rates, has stayed in a range of 103 and 99 since the beginning of December.
China’s economy is likely to grow by about 6.7 percent this year, former PBOC academic adviser Li Daokui said. Markets largely shrugged off Moody’s Investors Service’s decision this week to lower its credit-rating outlook on China to negative from stable. The PBOC also eased the reserve-requirement ratio for banks effective March 1, boosting cash supply in the banking system.
— With assistance by Tian Chen, and Saijel Kishan