Bloomberg News

Yuan Forwards Drop for a Second Day on Weaker Reference Rate

February 22, 2012

Feb. 22 (Bloomberg) -- Yuan forwards declined for a second straight day as the central bank lowered the currency’s reference rate and a report showed China’s manufacturing may shrink for a fourth month in February.

The People’s Bank of China set the rate 0.04 percent weaker at 6.2988 per dollar. The Bloomberg-JPMorgan Asia Dollar Index retreated on concern a 130 billion euro ($172 billion) bailout for Greece that euro-area finance ministers approved yesterday won’t end Europe’s debt crisis. The preliminary reading on China’s manufacturing is 49.7 in February, according to an index by HSBC Holdings Plc and Markit Economics today. A number below 50 points to a contraction.

“There’s mild risk-aversion dynamics developing, and the dollar is strengthening” against Asian currencies, said Robert Minikin, a strategist at Standard Chartered Plc. in Hong Kong. “That is spilling over to the yuan market as well. But the moves are very shallow.”

Twelve-month non-deliverable forwards slipped to 6.2835 per dollar as of 4:39 p.m. in Hong Kong, from yesterday’s 6.2827, according to data compiled by Bloomberg. The forwards were at a 0.2 percent premium to the onshore spot rate. The contracts fell as much as 0.11 percent earlier.

The yuan closed at 6.2960 per dollar in Shanghai, from yesterday’s 6.2960, 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 gained 0.02 percent to 6.2907.

--Editors: Ven Ram, Anil Varma

To contact the reporters on this story: Kyoungwha Kim in Singapore at; Fion Li in Hong Kong at

To contact the editor responsible for this story: James Regan at

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