China allows currency traders to push the renminbi toward its best quarter since 1981 against the US dollar as economy picks up pace

China’s policymakers are in no rush to rein in a rapid advance in the yuan, as traders push the currency toward its largest quarterly rally on record.

The yuan has strengthened 4.4 per cent since the end of June to 6.7620 per dollar, set for the biggest ever quarterly gain in Bloomberg data going back to 1981. The currency is the best performer in Asia in the third quarter, with the buying momentum close to the strongest since January.

The yuan is being supported by a slump in the dollar, while Chinese media has been attributing the gains to the nation’s economic recovery. The People’s Bank of China has also helped by not standing in its way, which for some in the market is an incentive for the currency to push higher. Beijing’s daily fixings have tracked the spot rate, and officials have not expressed any concern over the currency’s strength.

“There is scope for further yuan gains before the authorities start to become concerned about excessive strength,” said Khoon Goh, head of Asia research at Australia & New Zealand Banking Group, adding that a lack of pushback from Beijing has encouraged him to become more bullish. “It is very likely for the yuan to hit 6.7 in the near term.”

Beijing’s apparent blessing of the rally is a far cry from a few years ago, when the PBOC sought to rein in gains for fears that it would hurt exporters. What’s different now is China has changed its strategy for boosting growth. It’s now more focused on cheapening imports and bolstering domestic consumption, and a stronger currency could help achieve that.