Nov. 15 (Bloomberg) -- The yuan rose on speculation exporters took advantage of an earlier drop to a three-week low to buy the currency at a more favorable exchange rate.
Overseas shipments from China slowed in the past two months, a sign Europe’s debt crisis is cooling demand. The central bank lowered its daily reference rate by the most since Oct. 13, sending the yuan down in early trading. Italy’s borrowing costs surged to the highest level since June 1997 at an auction of five-year debt yesterday, fueling concern the country will join Greece, Ireland and Portugal in seeking financial aid.
“Exporters are buying the yuan as the rates are more favorable,” said Banny Lam, Hong Kong-based economist at CCB International Securities Ltd., a unit of China’s second-largest lender. “The yuan has been more volatile and it will remain so in the coming weeks because of the ongoing developments in Europe.”
The yuan appreciated 0.12 percent to close at 6.3465 per dollar in Shanghai, according to the China Foreign Exchange Trade System. It touched 6.3658 earlier, the weakest level since Oct. 26.
In Hong Kong’s offshore market, the yuan strengthened 0.02 percent to 6.3550. Twelve-month non-deliverable forwards slipped 0.09 percent to 6.3475, a 0.02 percent premium to the onshore spot rate, according to data compiled by Bloomberg.
The People’s Bank of China set the reference rate 0.21 percent weaker at 6.3436 per dollar. The currency is allowed to trade 0.5 percent either side of the central bank’s fixing.
China’s exports increased 15.9 percent in October from a year earlier, slowing from the 17.1 percent pace the previous month, government data showed on Nov. 10.
--Editors: Simon Harvey
To contact the reporter on this story: Fion Li in Hong Kong at firstname.lastname@example.org
To contact the editor responsible for this story: Sandy Hendry at email@example.com