2016-03-18 — wsj.com
China allowed the steepest one-day gain in its currency against the dollar since November on Friday, extending the yuan's recent advances after the Federal Reserve this week said U.S. interest rates would likely rise at a slower pace than previously thought. China's central bank fixed the yuan's daily midpoint... 0.52% stronger than the day before.
This was the third-largest appreciation of the so-called fix since the yuan depegged from the U.S. dollar in 2005. After setting the exchange rate each day, the central bank allows the yuan to trade within a 2% band either side of it in onshore markets.
Market analysts expressed skepticism that the yuan's bout of strength was here to stay. In offshore markets, where the yuan trades more freely, it also strengthened immediately after the fix Friday, but it slipped in later trading and was last 0.3% weaker on the day.
"It's still up in the air as to what the focus for their currency is," said Julian Evans-Pritchard, China economist at Capital Economics. "The yuan has been very stable against the dollar recently, and a lot of people were interpreting that as a sign they'd gone back to a soft dollar peg."
A stronger yuan could help China in its efforts to stem capital outflows. Chinese companies and individuals have been funneling cash offshore in recent months, partly in an effort to pay down U.S. dollar-denominated debt. China's slower economic growth had also led to speculation the central bank would have to allow the yuan to weaken.
Comments: Be the first to add a comment
Note: Comments may take a few minutes to show up on this page. If you go to the forum thread, however, you can see them immediately.