The yuan was little changed on concern Europe’s debt crisis will worsen, even as the central bank strengthened the currency’s reference rate by the most in a week.
The People’s Bank of China raised the daily fixing by 0.13 percent, the most since June 7, to 6.3191 per dollar today. That was 0.8 percent stronger than yesterday’s closing spot price. Moody’s Investors Service cut Spain’s credit rating by three steps yesterday and lowered Cyprus’s bond rating to Ba3 from Ba1, ahead of Greece’s elections on June 17.
“China hopes to signal through the fixing that it favors a stable currency to attract capital inflows,” said Banny Lam, chief economist at CCB International Securities Ltd. in Hong Kong, a unit of China’s second-largest bank. “As risk sentiment and economic data are bleak, the yuan is unlikely to appreciate much in the near term.”
The yuan traded little changed at 6.3703 per dollar in Shanghai, compared with 6.3691 yesterday, according to the China Foreign Exchange Trade System. The currency is allowed to trade as much as 1 percent on either side of the daily fixing. Its one-month volatility, a measure of exchange-rate swings used to price options, fell three basis points, or 0.03 percentage point, to 2.17 percent.
In Hong Kong’s offshore market, the yuan was little changed at 6.3690 per dollar. Twelve-month non-deliverable forwards declined 0.02 percent to 6.4195, a 0.8 percent discount to the onshore spot rate.
To contact the reporter on this story: Fion Li in Hong Kong at email@example.com
To contact the editor responsible for this story: Sandy Hendry at firstname.lastname@example.org