Yuan Forwards Gain Most Since January on Global Usage Optimism

Yuan forwards advanced by the most since January on speculation China will step up efforts to promote the use of the currency internationally.

The yuan and Australia’s dollar will start direct trading tomorrow, according to Australian Prime Minister Julia Gillard. The world’s second-largest economy will expand 8.2 percent this year and 8 percent in 2014, the Asian Development Bank said in a report today. Gross domestic product increased 7.8 percent in 2012. Consumer prices climbed 2.1 percent in March from a year earlier, compared with the 2.5 percent median estimate in a Bloomberg survey, official data showed.

“Foreign investors have become more confident of Chinese assets,” said Tommy Ong, the Hong Kong-based senior vice president of treasury and markets at DBS Bank (Hong Kong) Ltd. “There are signs that China will accelerate the opening of its capital account and attract more foreign funds into its domestic markets. These support the yuan’s exchange rate.”

Twelve-month non-deliverable forwards rose 0.2 percent to 6.2785 per dollar as of 4:57 p.m. in Hong Kong, according to data compiled by Bloomberg. That’s the biggest gain since Jan. 10. The contracts traded at a 1.2 percent discount to the spot rate in Shanghai, which was little changed at 6.2024.

The yuan touched 6.1986 on April 2, the strongest level since the government unified official and market exchange rates at the end of 1993. The People’s Bank of China raised the daily fixing by 0.02 percent to 6.2639 today.

In Hong Kong’s offshore market, the Chinese currency climbed 0.09 percent to 6.1936 per dollar, data compiled by Bloomberg show. One-month implied volatility in the onshore yuan, a measure of expected moves in the exchange rate used to price options, was unchanged at 1.31 percent.

Official data tomorrow may show exports climbed 11.7 percent from a year earlier in March, compared with 21.8 percent the previous month, according to the median estimate in a Bloomberg News survey of economists.

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