The yuan rose to a 17-year high after the Chinese-language National Business Daily newspaper said there was speculation the Chinese government would announce a “relatively important” currency policy tomorrow, the anniversary of the country’s scrapping of a two-year peg against the US dollar.
The yuan completed its weekly advance after the People’s Bank of China set its reference rate at 0.13 percent higher yesterday, at a record 6.4716 per US dollar.
The Chinese government’s State Administration of Foreign Exchange said in its annual report that China would gradually increase exchange-rate flexibility, which was interpreted as a signal that the yuan’s trading band would be expanded, the National Business Daily said, citing unidentified analysts.
“It’s the one-year anniversary of de-pegging the yuan to the dollar and people speculate there will be another change,” said Dariusz Kowalczyk, a Hong Kong-based strategist at Credit Agricole CIB. “And the fixing was much stronger, raising speculation they are preparing the market for a stronger yuan.”
The yuan gained 0.09 percent this week and was unchanged yesterday at 6.474 per US dollar in Shanghai, according to the China Foreign Exchange Trade System. It touched 6.463 earlier, the highest level since China unified official and market exchange rates at the end of 1993.
Credit Agricole expects China to widen the trading band in the near future and the currency to appreciate to 6.30 by the end of the year, Kowalczyk said.
In Hong Kong’s offshore market, the yuan climbed 0.24 percent yesterday and 0.16 percent this week to close at 6.468.
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