Yuan rallies from a 10-month low
By Feng Jianmin |
July 25, 2012, Wednesday
|
Print Edition
Print Edition
THE yuan strengthened slightly against the US dollar yesterday from a 10-month low after data showed manufacturing activities may improve in July.
The yuan closed at 6.3858 per dollar in Shanghai, stronger than Monday's close of 6.3861.
The central bank set the central parity rate yesterday morning at 6.3339 yuan per dollar, 69 basic points weaker than Monday. The yuan is allowed to trade within 1 percent on each side of the central parity rate.
The HSBC Flash PMI for July, the earliest available indicator of China's industrial sector and which is slanted more towards private and export-oriented firms, rebounded to 49.5, the highest in five months, from June's final reading of 48.2.
A reading under 50 still indicates contraction but Qu Hongbin, chief economist for China at HSBC Holdings Plc, said that the data indicated a fast pace of recovery.
"The PMI rebounded a little while the situation is not yet favorable," said a trader who declined to be named. "A weaker yuan may help exports and support economic growth, but there should be strong support at 6.4 yuan to the dollar."
The yuan has weakened 0.5 percent against the dollar since the beginning of this year after China's economic growth slowed down and the greenback strengthened on mounting risk aversion.
Data showed that Chinese companies and individuals were more willing to keep foreign currencies in June along with weakening of the yuan.
Banks sold US$3.5 billion more in foreign currencies to clients than the amount they bought from them in June, the State Administration of Foreign Exchange said yesterday in a statement.
Net selling also occurred in November, December and April.
For the first six months, banks sold US$216.4 billion to clients and bought US$222.8 billion, the statement said.
The yuan closed at 6.3858 per dollar in Shanghai, stronger than Monday's close of 6.3861.
The central bank set the central parity rate yesterday morning at 6.3339 yuan per dollar, 69 basic points weaker than Monday. The yuan is allowed to trade within 1 percent on each side of the central parity rate.
The HSBC Flash PMI for July, the earliest available indicator of China's industrial sector and which is slanted more towards private and export-oriented firms, rebounded to 49.5, the highest in five months, from June's final reading of 48.2.
A reading under 50 still indicates contraction but Qu Hongbin, chief economist for China at HSBC Holdings Plc, said that the data indicated a fast pace of recovery.
"The PMI rebounded a little while the situation is not yet favorable," said a trader who declined to be named. "A weaker yuan may help exports and support economic growth, but there should be strong support at 6.4 yuan to the dollar."
The yuan has weakened 0.5 percent against the dollar since the beginning of this year after China's economic growth slowed down and the greenback strengthened on mounting risk aversion.
Data showed that Chinese companies and individuals were more willing to keep foreign currencies in June along with weakening of the yuan.
Banks sold US$3.5 billion more in foreign currencies to clients than the amount they bought from them in June, the State Administration of Foreign Exchange said yesterday in a statement.
Net selling also occurred in November, December and April.
For the first six months, banks sold US$216.4 billion to clients and bought US$222.8 billion, the statement said.
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