The offshore yuan climbed to a three-week high after China’s central bank strengthened its daily fixing by the most in a month following a retreat in the US dollar.
The People’s Bank of China (PBOC) raised the yuan’s reference rate by 0.1 percent to 6.1233 versus the greenback. The Bloomberg Dollar Spot Index, which tracks the currency against 10 major peers, dropped 0.6 percent on Friday, as data showed US hourly earnings fell last month by the most since 2006. China’s exports rose 6 percent last month, compared with 4.7 percent in November last year, according to a Bloomberg survey before data due today.
“After the non-farm payroll data, there was an adjustment in the US dollar,” Bank of East Asia Ltd currency analyst Kenix Lai (賴春梅) said in Hong Kong. “An expected improvement [today] in exports should also continue to support the yuan.”
The offshore yuan advanced 0.04 percent to 6.2030 per dollar as of 4:51pm in Hong Kong, data compiled by Bloomberg show. It earlier rose to 6.1958, the strongest level since Dec. 17 last year. The yuan in Shanghai gained 0.08 percent to close at 6.2036, 1.3 percent weaker than before the fixing and within the 2 percent daily limit, China Foreign Exchange Trade System prices show. Twelve-month non-deliverable forwards climbed 0.08 percent to 6.3075, 1.6 percent lower than the onshore spot rate.
The PBOC will take measures including buying or selling foreign exchange when the rate moves out of a range that is considered an “appropriate and equilibrium level,” Caixin magazine reported, citing central bank researcher Wang Yu (王宇). The monetary authority will maintain a “prudent” monetary policy and ensure sufficient liquidity in the banking system, it said in a statement on Friday.
The nation’s foreign-exchange reserves will probably drop to between US$3.5 trillion and US$4 trillion by the end of this year, according to 50 percent of 18 economists surveyed by Bloomberg from Wednesday to Thursday last week. The stockpile, the world’s largest, was US$3.89 trillion at the end of September last year, down US$105.5 billion from the end of June last year.
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