Yuan Picking Up, Trading Near 3 Year High

By: EW News Desk Team   Date: 15 August 2011

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EW News Desk Team

Always on the look out for the latest news to monitor the state of the world economy.

EconomyWatch, News Desk Team

 

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15 August 2011

China's yuan hit a fresh high against the dollar late Friday after the central bank guided its currency upward for the third straight day, marking the yuan's biggest weekly rise since it was essentially unpegged from the greenback last year.

 

The People’s Bank of China set the currency’s reference rate 0.03 percent higher at a record 6.3950 per dollar. The yuan had its biggest gain since 2007 last week as official data showed consumer prices rose the most in three years last month and China’s trade surplus surged, Bloomberg reported.

“Fundamentals really support the yuan to be stronger,” said Leong Sook Mei, a currency strategist in Singapore at Bank of Tokyo-Mitsubishi UFJ Ltd. “The data for the trade surplus as well as inflation were very elevated.”

Twelve-month non-deliverable forwards rose 0.02 percent to 6.2695 per dollar as of 10:03 a.m. in Hong Kong, according to data compiled by Bloomberg. The contracts reached 6.2650 earlier, the strongest level since April 2008. The premium to the exchange rate in Shanghai was 2 percent, up from a two-year low of 0.4 percent on August 9.

The yuan slipped 0.05 percent to 6.3924, according to the China Foreign Exchange Trade System. The currency advanced 0.8 percent last week and touched 6.3890 on August 12, the strongest level since the country unified official and market exchange rates at the end of 1993.

In Hong Kong’s offshore market, the yuan gained 0.05 percent to 6.3795.

Consumer prices climbed 6.5 percent from a year earlier in July, the most since June 2008, according to official data released on August 9. China had a trade surplus of $31.5 billion in July, the biggest since January 2009, the government said the next day.

 


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