Yuan advances before meeting of G20 leaders
Updated: 2011-11-04 07:58
The G20 is debating whether to include a reference to China's currency in a joint statement by leaders following their two-day summit, according to an official from one of the nations in the group. Provided to China Daily
China's central bank says govt open to increased flexibility of renminbi
HONG KONG - China's yuan on Thursday advanced the most in a week before the G20 summit. The reference rate strengthened 0.16 percent to 6.3198 a dollar, the highest level since July 2005.
The government remains open to increased flexibility of the yuan, Zhang Tao, director general of the international department of the People's Bank of China, said on Wednesday before the meeting in Cannes, France. Inflationary pressure in China is still high, Phoenix News Media reported on Wednesday, citing Vice-Minister of Finance Li Yong.
"The record fixing reflects China's confidence in its economic growth prospects and its determination to fight inflation," said Banny Lam, a Hong Kong-based economist at CCB International Securities Ltd, a unit of China's second-largest lender. "A stronger exchange rate is in line with China's goal to make the yuan a global currency."
The yuan advanced 0.09 percent to close at 6.3514 a dollar in Shanghai, according to the China Foreign Exchange Trade System. The currency is allowed to trade up to 0.5 percent either side of the reference rate.
"The yuan fixing is too high and investors are buying dollars in the market on expectations the greenback may strengthen further," said Liu Dongliang, a Shenzhen-based senior analyst at China Merchants Bank Co, the nation's sixth-largest lender.
The G20 is debating whether to include a reference to China's currency in a joint statement by leaders following their two-day summit, according to an official from one of the nations in the group. A draft of the communique singled out China as needing to allow more flexibility in its currency to help ease alleged global trade and investment imbalances, the official said on condition of anonymity because discussions on the statement haven't finished.
The official wasn't convinced the citation will remain in the final version because of opposition.
In Hong Kong's offshore market, the yuan slipped 0.11 percent to 6.3963 a dollar, after gaining 0.23 percent on Wednesday. Twelve-month non-deliverable forwards on the yuan declined 0.07 percent to 6.3745, a 0.4 percent discount to the onshore rate.
Yuan deposits in Hong Kong may have recorded a "sizable decline" in October as investor demand for the currency dropped on global economic instability, HSBC Holdings PLC said in a report dated on Wednesday. Investors could bet on yuan appreciation using "short-end" non-deliverable forwards rather than by purchasing the currency in the offshore market, the bank said.
Consumer prices rose 6.1 percent in September from a year earlier after having increased 6.2 percent in August, according to official data. The inflation rate has exceeded the government's annual target of 4 percent a month this year.