• Tue
  • Jul 29, 2014
  • Updated: 9:03pm
BusinessMoneyMarkets & Investing
CURRENCIES

Yuan hits new intraday high against US dollar

Chinese currency sets another record against US dollar despite tough outlook for exports

PUBLISHED : Friday, 26 October, 2012, 12:00am
UPDATED : Friday, 26 October, 2012, 2:50am

The spot rate for the yuan advanced to a new 19-year-high in intraday trading yesterday, but analysts said a significant appreciation was unlikely in the near future.

The yuan closed at 6.2417 to the US dollar in Shanghai, the highest since 1993, when the government unified the official and market exchange rates. Yesterday's close for the first time hit the upper limit of the band permissible for yuan's daily trading.

The People's Bank of China set the reference rate 0.05 per cent higher at 6.3047 per dollar, raising it for the first time in five days after it hit historic highs repeatedly in the past few weeks.

The central bank widened the daily trading band from 0.5 per cent around the reference rate to 1 per cent in April.

Mizuho Securities economist Shen Jianguang said the rise in the yuan came amid anticipation of capital inflows following the United States' third round of quantitative easing (QE3) and would be "short-lived" given the grim export outlook.

The International Institute of Finance estimates that net private capital inflows to the emerging market from QE3 will reach US$1.026 trillion yuan. The yuan has risen about 1.4 per cent against the dollar since last month, but still less than the Russian rouble's 4.8 per cent gain and the Indian rupee's 4.3 per cent increase.

Economists said the yuan's gain could also be attributed to China's attempts to ward off criticism of manipulating exchange rates before the US presidential elections and initial signs of economic recovery on the mainland.

Meanwhile, the Shanghai Securities News, citing unnamed officials, reported that China was allowing overseas investors to buy stakes in unlisted companies using offshore yuan, part of Beijing's efforts to promote international use of the currency.

The Hong Kong unit of Haitong Securities and Bank of Shanghai planned to raise up to US$100 million in the first fund under the renminbi qualified foreign limited partner scheme, initially launched in Shanghai, the newspaper said.

Share

Related topics

For unlimited access to:

SCMP.com SCMP Tablet Edition SCMP Mobile Edition 10-year news archive
 
 

 

 
 
 
 
 

Login

SCMP.com Account

or