Offshore Yuan Completes Weekly Gain as Leaders Boost Sentiment

China’s yuan traded in Hong Kong had its biggest weekly gain in a month after the nation’s leaders quelled speculation that depreciation would be used to support the economy.

The yuan is stable compared with other currencies and its moves are normal, People’s Bank of China Governor Zhou Xiaochuan said at a press conference in Beijing Thursday. The nation is in talks with the International Monetary Fund to include the yuan in its basket of reserve currencies, Deputy Governor Yi Gang said the same day, adding to comments Tuesday that the currency has been the strongest after the dollar recently. Premier Li Keqiang last week pledged to keep the yuan at a reasonable level as its usage is promoted overseas.

The offshore yuan gained 0.18 percent this week, the most since the five days through Feb 6, to 6.2737 a dollar as of 4:45 p.m. in Hong Kong, according to data compiled by Bloomberg. It was little changed Friday. The rate in Shanghai rose 0.05 percent from March 6 as well as for the day to 6.2595, China Foreign Exchange Trade System prices show.

“The aim to make the yuan a reserve currency and the comments that the yuan is strong have been improving market sentiment,” said Li Bo, Shanghai-based chief investment consultant at GF Securities. “Economic data are also helping make the yuan more attractive.”

Aggregate financing was 1.35 trillion yuan ($216 billion) in February, the PBOC said in Beijing Thursday, more than the 1 trillion yuan median forecast in a Bloomberg survey. New yuan loans totaled 1.02 trillion yuan and M2 money supply rose 12.5 percent from a year earlier.

The yuan “has no issues” in meeting the criteria in terms of global usage for an International Monetary Fund review later this year, PBOC’s Yi said. China’s central bank strengthened the yuan’s fixing by 0.05 percent, the most since Feb. 13, to 6.1588 a dollar Friday. The onshore yuan’s gap with the central bank’s daily fixing was 1.64 percent, within the 2 percent limit.

Twelve-month non-deliverable yuan forwards lost 0.09 percent to 6.41 a dollar this week, according to data compiled by Bloomberg. The contracts traded 2.35 percent weaker than the spot rate in Shanghai.

— With assistance by Tian Chen

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