The yuan advanced, paring a weekly decline, after the central bank raised the currency’s fixing by the most in a week.
The People’s Bank of China set its daily reference rate 0.25 percent stronger today at 6.3200 against the dollar. Premier Wen Jiabao said in Beijing this week the yuan may be near equilibrium and policy makers will allow greater movement in the exchange rate. Asian currencies rose today after better- than-expected U.S. economic data improved the outlook for the region’s exports.
“China’s policy makers are definitely increasing volatility, they’re really serious now,” said Craig Chan, the Singapore-based head of foreign-exchange strategy for Asia excluding Japan at Nomura Holdings Inc. “They want to eventually move to a more market-driven currency.”
The yuan climbed 0.14 percent to 6.3213 per dollar as of 10:28 a.m. in Shanghai, according to the China Foreign Exchange Trade System. The currency lost 0.17 percent this week. The yuan is allowed to move 0.5 percent either side of the fixing.
In Hong Kong’s offshore market, the yuan rose 0.14 percent to 6.3225 and declined 0.3 percent this week. Twelve-month non- deliverable forwards gained 0.27 percent to 6.3218, almost the same as the onshore spot rate, according to data compiled by Bloomberg. The contracts fell 0.4 percent this week.
One-month implied volatility for the yuan, a measure of exchange-rate swings used to price options, climbed to 2.55 percent, the highest level in two months.
Claims for jobless benefits in the U.S. dropped last week to match a four-year low, while U.S. consumer confidence rose to the highest since 2008, reports showed yesterday. China’s exports increased 18.4 percent in February from a year earlier, the most in six months, official data showed on March 10.
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