The Chinese currency strengthened for the fourth trading day against the US dollar on Tuesday as investors were betting MSCI would announce the inclusion of Chinese A shares in its benchmark on Wednesday, which could create a sharp increase in demand for the Chinese currency.
The onshore Chinese currency gained 0.02 per cent, or 12 pips, to 6.2048. Yet the offshore yuan weakened 0.03 per cent, or 19 basis points, to 6.2107.
The People’s Bank of China set the renminbi midpoint rate at 6.1179, 26 basis points stronger than a day earlier.
MSCI is due to announce on Wednesday whether A shares will be elevated to the stock benchmarks that are closely followed by fund managers worldwide.
The strength of the yuan also came as traders kept selling the greenback following media reports that the US President Barack Obama said a strong dollar is problematic.
Obama was quoted by an unnamed French official in a news service report telling fellow Group of Seven leaders that a strong dollar is a problem. A White House spokesman denied the report but this did not stop traders from sell the currency.
