Yuan Drops Most in 5 Weeks After PBOC Sets Lower Reference Rate
August 10, 2010, 5:43 AM EDT
Aug. 10 (Bloomberg) -- China’s yuan dropped the most in five weeks after the central bank set a lower reference rate and as the U.S. currency gained.
The People’s Bank of China set the daily fixing at 6.7745 per dollar, 0.11 percent weaker than yesterday’s closing spot rate of 6.7671, while the greenback strengthened against 15 of the world’s 16 most-active currencies. China today reported that its trade surplus unexpectedly climbed to an 18-month high as exports increased to a record in July.
“The central parity rate today is bearing some resemblance to broader dollar moves,” said Emmanuel Ng, a foreign-exchange strategist at Oversea-Chinese Banking Corp. in Singapore. “On the surface, the trade-surplus data would heighten appreciation expectations, but beyond that the market would look at the broader picture and how the dollar will behave.”
The yuan declined 0.07 percent to 6.7720 per dollar as of 5:30 p.m. in Shanghai, according to the China Foreign Exchange Trade System. Twelve-month non-deliverable forwards dropped 0.04 percent to 6.6655, reflecting bets the currency will strengthen 1.6 percent from the spot rate in a year, according to data compiled by Bloomberg.
Ng said the yuan may rise to 6.6975 by year-end, compared with his previous prediction of 6.6915. The yuan has advanced 0.8 percent since the central bank scrapped a two-year-old dollar peg on June 19.
Bill Auction
China’s government bonds were little changed after the central bank kept the yield on its one-year bills at 2.0929 percent for a ninth straight weekly auction, signaling its preference for steady money-market rates.
The monetary authority sold 33 billion yuan ($4.9 billion) of the securities in today’s open-market operations at a yield that’s remained unchanged since June 8.
“Bonds didn’t move much because investors don’t expect the central bank to raise bill yields in the short run,” said Wang Mingfeng, a fixed-income analyst with Citic Securities Co. in Beijing, China’s biggest listed brokerage. “Rumors about inflation data are in line with what people forecast, so I don’t expect the figures will have much impact on bond prices.”
The yield on the 3.41 percent note due in June 2020 was 3.27 percent, and the price of the security was 101.20 per 100 yuan face amount, according to the National Interbank Funding Center.
August 10, 2010, 5:43 AM EDT
Aug. 10 (Bloomberg) -- China’s yuan dropped the most in five weeks after the central bank set a lower reference rate and as the U.S. currency gained.
The People’s Bank of China set the daily fixing at 6.7745 per dollar, 0.11 percent weaker than yesterday’s closing spot rate of 6.7671, while the greenback strengthened against 15 of the world’s 16 most-active currencies. China today reported that its trade surplus unexpectedly climbed to an 18-month high as exports increased to a record in July.
“The central parity rate today is bearing some resemblance to broader dollar moves,” said Emmanuel Ng, a foreign-exchange strategist at Oversea-Chinese Banking Corp. in Singapore. “On the surface, the trade-surplus data would heighten appreciation expectations, but beyond that the market would look at the broader picture and how the dollar will behave.”
The yuan declined 0.07 percent to 6.7720 per dollar as of 5:30 p.m. in Shanghai, according to the China Foreign Exchange Trade System. Twelve-month non-deliverable forwards dropped 0.04 percent to 6.6655, reflecting bets the currency will strengthen 1.6 percent from the spot rate in a year, according to data compiled by Bloomberg.
Ng said the yuan may rise to 6.6975 by year-end, compared with his previous prediction of 6.6915. The yuan has advanced 0.8 percent since the central bank scrapped a two-year-old dollar peg on June 19.
Bill Auction
China’s government bonds were little changed after the central bank kept the yield on its one-year bills at 2.0929 percent for a ninth straight weekly auction, signaling its preference for steady money-market rates.
The monetary authority sold 33 billion yuan ($4.9 billion) of the securities in today’s open-market operations at a yield that’s remained unchanged since June 8.
“Bonds didn’t move much because investors don’t expect the central bank to raise bill yields in the short run,” said Wang Mingfeng, a fixed-income analyst with Citic Securities Co. in Beijing, China’s biggest listed brokerage. “Rumors about inflation data are in line with what people forecast, so I don’t expect the figures will have much impact on bond prices.”
The yield on the 3.41 percent note due in June 2020 was 3.27 percent, and the price of the security was 101.20 per 100 yuan face amount, according to the National Interbank Funding Center.