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Yuan forwards strengthen; bonds decline

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1 Yuan forwards strengthen; bonds decline on Wed Mar 31, 2010 12:31 pm


Updated Wednesday, March 31, 2010 10:05 am TWN, Bloomberg
Yuan forwards strengthen; bonds decline

BEIJING -- Yuan forwards rose for the third day in a row on speculation faster economic growth and accelerating inflation will convince China to let the currency resume appreciation. Government bonds declined.

The economy is likely to expand about 10 percent this year, following growth of 8.7 percent in 2009, Chen Dongqi, a researcher at the National Development and Reform Commission, said Tuesday at a conference in Beijing. Japanese Finance Minister Naoto Kan will visit China this weekend to discuss issues including the yuan, Vice Finance Minister Naoki Minezaki said.

“Given the positive sentiment toward Asia, you would expect yuan appreciation to return ultimately,” said Emmanuel Ng, a currency strategist at Oversea-Chinese Banking Corp. in Singapore.

Twelve-month non-deliverable forwards climbed 0.1 percent to 6.6630 per dollar as of 5:46 p.m. in Hong Kong, reflecting bets the currency will appreciate 2.4 percent from the spot rate of 6.8258, according to data compiled by Bloomberg.

The yield on the 3.48 percent bond due in July 2019 rose two basis points to 3.48 percent, and the price of the security slid 0.16 per 100 yuan face amount in the period to 99.996, according to the National Interbank Funding Center. The yield has rebounded 11 basis points in the past week, trimming this year's decline to 15 basis points. A basis point is 0.01 percentage point.

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