Yuan's mid-point fixed at a record high
By Louise Ho |
March 24, 2012, Saturday
|
Print Edition
Print Edition
THE yuan's daily mid-point was fixed at a record high yesterday, leading to speculation that the central bank had guided the yuan to be stronger to strengthen market confidence amid slowing economic growth and rising foreign debt.
The US dollar to the yuan rate was fixed at 6.2891 yesterday, down from 6.3004 on Thursday, according to the State Administration of Foreign Exchange.
The yuan is allowed to move as much as 0.5 percent on either side of the daily fixing, which is used by the People's Bank of China, the central bank, to show the government's intended value of the yuan.
The PBOC allowed the yuan to weaken by 0.7 percent against the dollar in its mid-point in the first half of March, but has let the yuan rise 0.5 percent since March 18. The yuan closed at 6.3078 in Shanghai yesterday.
Traders said the central bank's record fixing points to the government's attempt to prevent a massive yuan sell-off amid increasing capital outflow.
China's economic activity, as measured by the HSBC flash Purchasing Managers Index, fell to 48.1 in March, the lowest since November, which aggravated concerns of a sharp slowdown in the country's economic growth. A reading below 50 shows contraction.
A recent rise in China's short-term external debt suggests that the Chinese currency is at risk of heavy selling.
The US dollar to the yuan rate was fixed at 6.2891 yesterday, down from 6.3004 on Thursday, according to the State Administration of Foreign Exchange.
The yuan is allowed to move as much as 0.5 percent on either side of the daily fixing, which is used by the People's Bank of China, the central bank, to show the government's intended value of the yuan.
The PBOC allowed the yuan to weaken by 0.7 percent against the dollar in its mid-point in the first half of March, but has let the yuan rise 0.5 percent since March 18. The yuan closed at 6.3078 in Shanghai yesterday.
Traders said the central bank's record fixing points to the government's attempt to prevent a massive yuan sell-off amid increasing capital outflow.
China's economic activity, as measured by the HSBC flash Purchasing Managers Index, fell to 48.1 in March, the lowest since November, which aggravated concerns of a sharp slowdown in the country's economic growth. A reading below 50 shows contraction.
A recent rise in China's short-term external debt suggests that the Chinese currency is at risk of heavy selling.
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