x

Abu Dhabi, UAESaturday 23 June 2018

Yuan finds lift on China's GDP and central bank

Boosted by PBOC fixing move and forecast-beating economic growth

A hot air balloon flies over Wuqing District of Tianjin, China. The country's economic performance has boosted yuan trading. Reuters
A hot air balloon flies over Wuqing District of Tianjin, China. The country's economic performance has boosted yuan trading. Reuters

The onshore yuan traded near the highest level in eight months, boosted by a stronger central bank fixing and data showing China’s economy held up in the second quarter.

The yuan gained 0.02 per cent to 6.7728 per dollar, close to its highest level since November 4, as of 2:56pm in Shanghai. The currency climbed as much as 0.14 per cent earlier, before paring its advance against a rising greenback. The People’s Bank of China set its daily fixing at the strongest level since November 4. The offshore rate dropped 0.06 per cent to 6.7699.

The nation’s GDP increased 6.9 per cent in the three months through June, beating a Bloomberg survey’s median forecast of 6.8 per cent growth. June industrial output, fixed-asset investment and retail sales all surpassed estimates as well. China will carry on efforts to make the yuan more market-based, and it will push ahead with globalisation of the currency in a steady manner, the president Xi Jinping said at the two-day National Financial Work Conference that ended at the weekend.

The MSCI All Country World Index rose a seventh day as China’s economy maintained momentum last quarter, enhancing the allure of stocks after soft US consumer price data reinforced the need for gradual tightening by the Federal Reserve.

"The sentiment on the yuan is relatively good as the policy makers appear to favour a stable currency that fluctuates in a narrow range," said Tommy Xie, a Singapore-based economist at Oversea-Chinese Banking Corp. "The yuan will be driven by the dollar throughout the rest of 2017, and there are no major domestic reasons for the currency to depreciate. It will end the year around 6.8 to 6.9 per dollar."

The onshore yuan rose 0.5 pe rcent last week, rising to the strongest closing level in eight months as the Bloomberg Dollar Spot Index fell 1.3 per cent, the most since mid-May. The median forecast in a Bloomberg survey is for the yuan to round up 2017 at 6.92 against the dollar.