Yuan's Outperformance Widens With Biggest Jump in Seven MonthsBy
China’s currency strengthens 0.65% overnight to new high
Yuan is biggest gainer in Asia this month as dollar weakens
Gains in China’s currency accelerated sharply in overnight trading, with the yuan surging the most in seven months against the greenback.
Traders struggled to find a reason for the 0.65 percent jump, with one noting that moves can be exaggerated amid thin liquidity in the overnight session. The advance comes against a backdrop of increasing strength -- even before Monday’s gains, the yuan was the best performer in Asia this month.
China’s currency has turned around in 2017 -- after three years of losses -- helped by curbs on capital outflows, dollar weakness and a stabilizing economy. The central bank appears to see no issue with the appreciation: it’s been setting the currency fixing at the strongest levels in a year this week.
The yuan continued to strengthen Tuesday, gaining beyond 6.6 per dollar for the first time since June 2016. It went as far as 6.5986 before easing back to 6.6045 as of 3:42 p.m. in Shanghai. The offshore yuan climbed 0.2 percent to 6.6027, rising for a 10th day, the longest streak in almost seven years.
A break of the 6.60 level opens up the possibility of the yuan moving toward the 50 percent Fibonacci level near 6.50, said Khoon Goh, Singapore-based head of Asia research at Australia & New Zealand Banking Group. He said that move would require further dollar weakness. The Bloomberg Dollar Spot index slid 0.3 percent Tuesday and it was at its lowest since January 2015.
— With assistance by Emma Dai, and Ran Li