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Benjamin Robertson

China’s yuan firmed against the US dollar on Monday after better than expected manufacturing data and an agreement in principle among G7 nations to add the yuan to the International Monetary Fund’s currency basket.
The onshore yuan traded close to a one month high at 6.1978 against the US dollar, after ending trading at 6.1980 on Friday.
The People’s Bank of China set the midpoint rate at 6.1207 per US dollar prior to market open, the lowest level since late April.
A key gauge of manufacturing sector robustness came in marginally better than expected Monday at 49.2. The HSBC China Manufacturing PMI index was revised up from an earlier flash reading of 49.1, and showed improvement against an April reading of 48.9.
A separate Chinese government PMI reading nudged up to 50.2 in May from 50.1 the month before.
A reading below 50 indicates sector contraction.
HSBC analysts said they expect a 50 basis points reserve ratio cut in the coming weeks to help boost the economy.
A weak manufacturing sector has been a warning light for economists who say China’s needs to weaken its currency to boost export competitiveness.
The offshore yuan rate also traded stronger Monday at 6.2 against the US dollar versus a Friday close of 6.2027.
Late last week G7 finance ministers agreed it was desirable to include the yuan among the IMF Special Drawing Rights currency basket. The move would boost the yuan’s profile though a final decision on whether to include the currency has yet to be made.
The Hong Kong dollar traded 7.7519 against the US dollar.


China’s yuan strengthens on better than expected PMI data

Chinese yuan bank notes are counted in a bank as the currency strengthened on Monday on better-than-expected manufacturing data. Photo: AFP

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New | China’s yuan strengthens on better than expected PMI data