Feb. 28 (Bloomberg) -- The yuan gained the most in a week as oil prices declined and an increase in U.S. home sales added to signs of a recovery in China’s biggest export market.
Asian currencies strengthened as a report yesterday showed pending U.S. home resales climbed 2 percent last month after a 1.9 percent drop in December. Crude oil fell 0.5 percent to $107.97 a barrel in New York, having touched a nine-month high of $109.95 on Feb. 24. The central bank raised its daily reference rate for the yuan by 0.04 percent to 6.2961 per dollar.
“The retreat in oil prices lifted sentiment toward Asian currencies,” said Tommy Ong, the Hong Kong-based senior vice president of treasury and markets at DBS Bank (Hong Kong) Ltd. “China will face political pressure on the yuan’s exchange rate again once the crisis in Europe subsides, so the path to a 3 percent appreciation should be intact.”
The yuan rose 0.05 percent to 6.2987 per dollar as of 10:26 a.m. in Shanghai, according to the China Foreign Exchange Trade System. The currency is allowed to trade 0.5 percent either side of the reference rate.
In Hong Kong’s offshore market, the yuan appreciated 0.05 percent to 6.2995. Twelve-month non-deliverable forwards advanced 0.05 percent to 6.2883, a 0.2 percent premium to the onshore spot rate, according to data compiled by Bloomberg.
China’s current-account surplus is estimated to have fallen to 3 percent of gross domestic product in 2011, the State Administration of Foreign Exchange said in a statement posted on its website yesterday. China will prevent abnormal capital flows, SAFE said.
--Editors: James Regan, Simon Harvey
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