Feb. 15 (Bloomberg) -- Yuan forwards halted a four-day decline after Premier Wen Jiabao and the head of the central bank pledged to help Europe resolve a debt crisis that’s hurting Chinese exports.
China is ready to be more involved in tackling the crisis, Governor Zhou Xiaochuan said in Beijing, before European finance ministers hold a teleconference today to prod Greece to do more to clinch an aid package worth 130 billion euros ($171 billion). The Asian nation’s exports fell 0.5 percent from a year earlier in January, the first drop in more than two years.
“China’s comments have given more confidence to investors that Europe can find a solution,” said Stella Lee, president of Success Futures & Foreign Exchange Ltd. in Hong Kong. “However, it’s too early to be optimistic as we still have to see what the outcome is from today’s discussions between finance ministers.”
Twelve-month non-deliverable forwards were little changed at 6.2827 as of 11:12 a.m. in Hong Kong, a 0.3 percent premium to the onshore spot rate, according to data compiled by Bloomberg.
The yuan traded at 6.3005 in Shanghai, from 6.2996 yesterday, according to the China Foreign Exchange Trade System. The People’s Bank of China set its daily reference rate 0.02 percent weaker at 6.2958. The currency is allowed to trade 0.5 percent on either side of the fixing. In Hong Kong’s offshore market, the yuan traded at 6.3018 from 6.3010 yesterday.
President Barack Obama met yesterday with Chinese Vice President Xi Jinping and repeated the U.S. view that the yuan is undervalued and more should be done to let it appreciate, according to an administration official who wasn’t authorized to discuss the talks on the record. China’s policy makers may slow yuan gains to help exporters weather weakening overseas demand and rising labor costs, according to IHS Global Insight.
“Obama just repeated his old calls on the yuan without putting more pressure on Xi,” said Daniel Chan, a Hong Kong- based chief economist at BWC Capital Markets. “China is more worried about the export outlook now. Yuan gains may slow further if Europe continues to struggle with debt problems.”
--With assistance from Zheng Lifei in Beijing. Editors: James Regan, Simon Harvey
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