Yuan Rises for Fourth Day in Longest Run Since January on GrowthJustina Lee
China’s yuan climbed for a fourth day in the longest run of gains since January as reports showed factory output picked up in June.
The currency touched a 12-week high as the official Purchasing Managers’ Index for manufacturing released today showed a reading of 51 for last month, the highest since December. Another gauge compiled by HSBC Holdings Plc and Markit Economics rose to a seven-month high of 50.7. Regulators increased banks’ capacity to lend yesterday by changing the way loan-to-deposit ratios are devised.
“The economy has turned up and recent data has improved,” said Irene Cheung, a Singapore-based strategist at Australia & New Zealand Banking Group Ltd. “The latest move by the banking regulator to relax the computation of the loan-to-deposit ratio yesterday would also be a move to support growth.”
The yuan rose 0.05 percent to 6.2016 per dollar, China Foreign Exchange Trade System prices show. It has advanced 0.53 percent since June 25 and touched 6.1970 earlier, the strongest level since April 9. The currency will rally to 6.15 by year-end, ANZ forecast.
The People’s Bank of China strengthened its daily reference rate 0.01 percent to 6.1523 per dollar. The yuan traded 0.8 percent weaker than the fixing, within the 2 percent band. Recent fixings have reflected the weaker greenback, ANZ’s Cheung said. The Bloomberg Dollar Spot Index fell 0.6 percent over the past week amid uneven U.S. economic data.
In Hong Kong’s offshore market, the yuan climbed 0.03 percent to 6.2066 per dollar, according to data compiled by Bloomberg. Twelve-month non-deliverable forwards rose 0.04 percent to 6.2250. One-month implied volatility in the onshore yuan, a gauge of expected moves in the exchange rate used to price options, was unchanged at 1.40 percent.