Yuan Advances to Four-Week High as Manufacturing Seen ExpandingFion Li
China’s yuan advanced to a four-week high as the central bank set the currency’s fixing at the strongest level in more than a month before a report that is forecast to show manufacturing growth accelerated.
The People’s Bank of China raised the reference rate 0.1 percent to 6.2779 per dollar, the strongest level since Jan. 23 and the biggest increase since Feb. 8. That followed the Dollar Index’s two-day decline of 0.43 percent as Federal Reserve Chairman Ben S. Bernanke defended the central bank’s bond-buying. An official manufacturing Purchasing Managers’ Index will climb to 50.5 for February from 50.4 in January, according to the median estimate in a Bloomberg survey before data due tomorrow.
“There are signs that China’s growth momentum is picking up and the central bank is willing to let the yuan appreciate a bit with a stronger fixing,” said Bruce Yam, a Hong Kong-based foreign-exchange strategist at Sun Hung Kai Financial Ltd.
The yuan climbed 0.1 percent to close at 6.2213 per dollar in Shanghai, prices from the China Foreign Exchange Trade System show. It touched 6.2208 earlier, the strongest since Jan. 31. The currency’s five-day gain of 0.31 percent pared its monthly loss to 0.04 percent. The spot rate is allowed to trade as much as 1 percent on either side of the daily fixing.
The Chinese currency overtook the Russian ruble for transactions in the global payment system for the first time in January, according to a report by the Society for Worldwide Interbank Financial Telecommunication released yesterday.
In Hong Kong’s offshore market, the yuan advanced 0.06 percent to 6.2200 per dollar, according to data compiled by Bloomberg. Twelve-month non-deliverable forwards gained 0.05 percent to 6.3205, a 1.6 percent discount to the onshore spot rate.