Yuan Forwards Strengthen on Stronger Fixing for Geithner Visit
January 17, 2012, 1:53 PM ESTBy Fion Li
Jan. 10 (Bloomberg) -- Yuan forwards advanced for a second day as the central bank raised the currency’s daily reference rate before U.S. Treasury Secretary Timothy F. Geithner meets Chinese officials.
Geithner arrives in Beijing today, seeking to narrow differences on currency and trade disputes. The People’s Bank of China lifted the fixing 0.1 percent to 6.3171 per dollar, the first rise in four days. Export growth slowed to 13.4 percent in December, from 13.8 percent in November, according to official data released today. The trade surplus widened to $16.5 billion in December, compared with $14.5 billion in November and the median estimate of $8.8 billion in a Bloomberg survey, a separate report showed today.
“China tends to allow a stronger exchange rate whenever U.S. high-ranking officials visit, as a gesture that it’s pushing for more flexibility,” said Daniel Chan, an economist at BWC Capital Markets in Hong Kong. “However, a slowdown in export growth will hurt China’s economy, making yuan appreciation a less convincing story for investors.”
Twelve-month non-deliverable forwards advanced 0.18 percent to 6.3240 per dollar as of 4:54 p.m. in Hong Kong, at 0.1 percent discount to the spot rate in Shanghai.
The yuan closed at 6.3150 in Shanghai, little changed from yesterday’s 6.3146, according to the China Foreign Exchange Trade System. The currency is allowed to trade 0.5 percent on either side of the daily fixing. In Hong Kong’s offshore market, the yuan slipped 0.03 percent to 6.3159.
Yuan in 2012
The yuan will strengthen this year at the slowest pace since 2009 as shrinking growth curbs demand for the nation’s assets and Europe’s debt crisis hurts exports, according to the most-accurate forecasters.
The currency will gain 2.7 percent to 6.15 per dollar, according to Andy Ji, a Singapore-based strategist at Commonwealth Bank of Australia, whose estimates topped the analysis of the last six quarters by Bloomberg Rankings. Second- placed Oversea-Chinese Banking Corp. forecasts a 3.5 percent advance to 6.1. The onshore yuan rose 4.7 percent against the dollar last year, the best performance among the 10 most-traded Asian currencies excluding yen.
--Editors: Sandy Hendry, Ven Ram
To contact the reporter on this story: Fion Li in Hong Kong at fli59@bloomberg.net
To contact the editor responsible for this story: Sandy Hendry at shendry@bloomberg.net
