Dec. 20 (Bloomberg) -- China’s yuan forwards advanced on speculation the central bank favors a stronger currency to promote its globalization.
Asian stocks rallied today after Federal Reserve Bank of Richmond President Jeffrey Lacker predicted yesterday the U.S. economy will grow 2 percent to 2.5 percent next year, brightening the outlook for the regions’ exports. The southwestern province of Yunnan is starting regional trading of the yuan against the Thai Baht, the official Xinhua News Agency reported today, without giving further details.
“It’s obvious that the central bank favors a stronger yuan to encourage more usage,” said Steve Wang, the Hong Kong-based head of fixed-income research at Bank of China International, a unit of China’s fourth-largest lender by market value.
Twelve-month non-deliverable forwards rose 0.14 percent to 6.4005 per dollar as of 11:03 a.m. in Hong Kong, a 1 percent discount to the onshore spot rate, according to data compiled by Bloomberg.
The yuan was little changed at 6.3380 per dollar in Shanghai, according to the China Foreign Exchange Trade System. It fell as much as 0.27 percent earlier. The People’s Bank of China set the reference rate 0.08 percent weaker at 6.3351. The currency is allowed to trade 0.5 percent on either side of the daily fixing.
“It’s in China’s nature to keep a stable exchange-rate policy given the volatilities in the market,” Wang said.
The yuan has gained 0.6 percent in the past two trading sessions and touched 6.3294 per dollar on Dec. 16, the strongest level since China unified official and market exchange rates at the end of 1993. In Hong Kong’s offshore market, the yuan gained 0.06 percent to 6.3610.
China may adjust it economic growth target to less than 8 percent next year, the 21st Century Business Herald reported today, without saying where it got the information. The country may set its inflation target at 4 percent for 2012, the same as this year, the paper said.
-- With assistance from Regina Tan in Beijing. Editors: Andrew Janes, Anil Varma
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