China’s yuan rose to a 19-year high after the central bank raised its daily reference rate to the strongest level in more than 10 months.
The People’s Bank of China increased the fixing by 0.08% to 6.2689 per dollar, the highest since May 2, 2012. The currency is allowed to trade 1% either side of the rate. The Purchasing Managers’ Index for manufacturing in March will be 51, indicating a sixth month of expansion, according to the median estimate in a Bloomberg News survey of economists before official data on April 1. President Xi Jinping is on his first foreign visit since taking over earlier this month and has held meetings with the heads of the so-called BRICs nations of Brazil, Russia and India as well as African countries.
“Investors continue to be convinced about the gradual appreciation of the yuan,” said Samson Tu, a Taipei-based fund manager at Uni-President Assets Management Corp., which oversees $700 million. “The yuan’s recent strength is probably politically driven as Xi is on overseas visits.”
The yuan climbed 0.06% to close at 6.2108 per dollar in Shanghai, prices from the China Foreign Exchange Trade System show. The currency, which gained 0.31% this quarter, reached 6.2086 earlier, the strongest level since the government unified official and market exchange rates at the end of 1993. The spot rate advanced 0.02% this week, a fifth straight weekly gain.
Yuan deposits in Hong Kong climbed to a record 652 billion yuan ($105 billion) in February, the Hong Kong Monetary Authority said. The city has the largest pool of yuan savings overseas.
In the offshore market, the Chinese currency rose 0.05% to 6.2050 per dollar, data compiled by Bloomberg show. Twelve-month non-deliverable forwards advanced 0.1% to 6.3015 per dollar, a 1.4% discount to the spot rate in Shanghai.
One-month implied volatility, a measure of expected moves in the exchange rate used to price options, fell one basis point, or 0.01 percentage point, from a week ago to 1.22%.