Yuan Snaps Losing Streak as Reference Rate Set Near March HighFion Li
China’s yuan advanced for the first time in five days after the central bank raised its reference rate for the currency toward an eight-month high.
The People’s Bank of China boosted the fixing by 0.07 percent, the most in three weeks, to 6.1325 per dollar. That’s within 0.01 percent of a Nov. 27 level that was the strongest since March. The official Purchasing Managers’ Index for manufacturing was 50.3 for November, the lowest in eight months, data showed yesterday. A private gauge published separately fell to 50, the dividing line between expansion and contraction.
“China prefers a stable currency and hence the fixing has been relatively intact,” said Daniel Chan, an analyst at Brilliant & Bright Investment Consultancy Ltd. in Hong Kong. “However, it’s too early to turn optimistic on the yuan given the economic slowdown. We have to see if the government will roll out more measures to stimulate the economy.”
The yuan rose 0.03 percent to close at 6.1503 per dollar in Shanghai, China Foreign Exchange Trade System prices show. The currency fell 0.25 percent in the last four trading days and touched 6.1520 yesterday, the weakest level since September. The spot rate was 0.29 percent lower than the fixing, within the 2 percent limit.
In Hong Kong’s offshore market, the yuan climbed 0.11 percent to 6.1516 per dollar, data compiled by Bloomberg show. Twelve-month non-deliverable yuan forwards dropped 0.03 percent to 6.2625, 1.8 percent weaker than the spot rate in Shanghai.