Updated Tuesday, March 2, 2010 11:19 am TWN, Bloomberg
Yuan forwards rise to three-week high on currency appreciation speculation
BEIJING -- Yuan forwards rose to the highest level in more than three weeks on speculation China will allow the currency to appreciate this year to keep record loan growth from stoking inflation. Bonds advanced.
Twelve-month forwards gained for a second day as demand for regional assets picked up amid European Union discussions to offer assistance to debt-laden Greece in its efforts to reduce the widest budget deficit in the grouping. China will limit lending growth and prevent “abnormal” quarterly and monthly fluctuations through central bank policies and changes to the system of evaluating commercial banks, Xinhua News reported Sunday, citing the National Development and Reform Commission.
Yuan forwards gained 0.3 percent to 6.6389 per dollar as of 5:36 p.m. in Shanghai, from 6.6575 on Feb. 26, according to data compiled by Bloomberg, reflecting traders' bets the currency will strengthen 2.8 percent from the spot rate of 6.8263. The contracts touched 6.6365, the strongest level since Feb. 3.
“We believe that China should resume yuan appreciation in order to limit the risk of excess liquidity growth fuelling bubbles and to a lesser extent inflation risks,” Sebastien Barbe, head of emerging-market research at Credit Agricole CIB in Hong Kong, wrote in a research note Monday.
Yuan forwards rise to three-week high on currency appreciation speculation
BEIJING -- Yuan forwards rose to the highest level in more than three weeks on speculation China will allow the currency to appreciate this year to keep record loan growth from stoking inflation. Bonds advanced.
Twelve-month forwards gained for a second day as demand for regional assets picked up amid European Union discussions to offer assistance to debt-laden Greece in its efforts to reduce the widest budget deficit in the grouping. China will limit lending growth and prevent “abnormal” quarterly and monthly fluctuations through central bank policies and changes to the system of evaluating commercial banks, Xinhua News reported Sunday, citing the National Development and Reform Commission.
Yuan forwards gained 0.3 percent to 6.6389 per dollar as of 5:36 p.m. in Shanghai, from 6.6575 on Feb. 26, according to data compiled by Bloomberg, reflecting traders' bets the currency will strengthen 2.8 percent from the spot rate of 6.8263. The contracts touched 6.6365, the strongest level since Feb. 3.
“We believe that China should resume yuan appreciation in order to limit the risk of excess liquidity growth fuelling bubbles and to a lesser extent inflation risks,” Sebastien Barbe, head of emerging-market research at Credit Agricole CIB in Hong Kong, wrote in a research note Monday.