Yuan Climbs for Fourth Day Versus Basket as PBOC Backs Stabilityby
Central bank will work hard to keep yuan stable, official says
Fixing weakened by the most in two weeks amid dollar gains
The yuan gained for a fourth day versus a basket of currencies, the longest run since May, after the central bank said it will keep the exchange rate stable.
The People’s Bank of China will work hard to keep the yuan stable against a basket of currencies, Deputy Governor Chen Yulu said at a conference in Beijing on Sunday. The yuan halted a six-week run of losses last week on speculation authorities were stabilizing the exchange rate ahead of a Group of 20 meeting of finance chiefs held over the weekend in the southwestern city of Chengdu. China will host a G-20 summit in the eastern city of Hangzhou in September, and the yuan will be admitted to the International Monetary Fund’s Special Drawing Rights basket in October.
"After Chengdu, there’s Hangzhou and then SDR, so generally the yuan may be relatively stable," said Gao Qi, a strategist at Scotiabank in Singapore.
A Bloomberg replica of the trade-weighted CFETS RMB Index, which tracks the yuan against 13 currencies, rose 0.1 percent Monday, taking its four-day gain to 0.9 percent. The gauge has fallen 5.6 percent this year, spurring speculation policy makers want a weaker exchange rate to support exports.
The yuan was little changed at 6.6797 a dollar as of 4:39 p.m. in Shanghai, according to China Foreign Exchange Trade System prices. The offshore yuan fell 0.1 percent to 6.6895.
The PBOC weakened the fixing by 0.29 percent, the most since July 6, after a gauge of the dollar rose 0.3 percent on Friday. The yuan may drop against the greenback this week as traders are becoming more cautious about a potentially hawkish statement from the Federal Reserve when it meets this week, said Gao. Still, it will outperform Asian currencies, he added, citing reports that China’s trading partners have expressed concern over declines.
The Wall Street Journal reported on Sunday that officials from the nation’s major trading rivals showed concern over the yuan’s weakness this year at the G-20 meeting. The newspaper cited Western officials as saying they had cautioned China not to weaken its currency broadly.
China’s 10-year government bonds fell, pushing the yield up two basis points to 2.81 percent.