Yuan Rises to Strongest Level Since 1993 on Signs Central Bank Seeks Gains
2012-1-1 0:00:00Author： adminFont Size：Big Medium Small
A one-hundred Chinese yuan banknote is arranged next to a one-hundred U.S. dollar banknote in Beijing.
China’s yuan rose beyond 6.3 per dollar for the first time in 18 years on signs the central bank favors appreciation to prevent capital outflows. The benchmark money-market rate climbed to the highest level since July.
The People’s Bank of China set the currency’s reference rate 0.23 percent stronger at 6.3009, the highest level since a dollar peg ended in 2005, before markets close for the New Year break and reopen on Jan. 4. Hong Lei, a spokesman for the foreign ministry, said on Dec. 28 that China will continue to push for exchange-rate flexibility. Chinese manufacturing shrank less this month than in November, data showed today.
“The fixing may break through the key 6.3 level on the first trading day after the holiday,” following the spot rate, said Liu Dongliang, a senior analyst in Shenzhen at China Merchants Bank Co., the nation’s sixth-biggest lender. “The yuan may appreciate about 3 percent at most next year.”
The yuan advanced 0.40 percent to 6.2940 as of 4:30 p.m. in Shanghai, the strongest level since the country unified official and market exchange rates at the end of 1993, according to the China Foreign Exchange Trade System. The currency gained 4.7 percent this year, its best performance since 2008.
Twelve-month non-deliverable forwards climbed 0.30 percent to 6.3835 per dollar in Hong Kong. The contracts traded at a 1.4 percent discount to the onshore spot rate, according to data compiled by Bloomberg. In Hong Kong’s offshore market, the yuan rose 0.08 percent to 6.3450.
Manufacturing Index
The U.S. Treasury Department said on Dec. 27 it will seek further appreciation in the yuan and called the currency undervalued, while declining to brand China a manipulator of its exchange rate.
The yuan may appreciate as much as 3 percent against the dollar next year as the central bank seeks to stem capital outflows, Guangzhou-based China Guangfa Bank Co said in a report e-mailed to Bloomberg News today.
The HSBC Manufacturing Purchasing Managers’ Index for China climbed to 48.7 this month, compared with 47.7 in November. A reading below 50 signals contraction.
China’s money-market rate rose on speculation a cash shortage will worsen as banks hoard funds to meet year-end
Bloomberg
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