China’s yuan rallied past the central bank’s daily fixing for the first time after its trading range was increased twofold on speculation the world’s second-biggest economy is improving.
The yuan appreciated 0.12 percent to 6.1633 per dollar at the close of trading in Shanghai after surging close to its highest level in five months of 6.1624. The closing level was up 0.08 percent past Wednesday’s reference rate of 6.1681, the first time the exchange rate surpassed the daily fix since the trading spread was expanded by 2 percent in March.
“Letting the market forces have a bigger role in the currency is a good sign that the central bank is comfortable with a modest gain in the yuan,” Irene Cheung, a strategist at Australia & New Zealand Banking Group Ltd in Singapore, told Bloomberg. “External balances for China, including the trade surplus and capital flows, are constructive for the yuan.”
Investors are bubbling with optimism over China’s economic growth as manufacturing grew at the strongest pace in over two years in July while gross domestic product expanded 7.5 percent in the second quarter.
The Shanghai Composite Index of equities surged 7.5 percent in July, the most since December 2012, while the yuan has advanced 1.7 percent from a low of 6.2676 per dollar touched in April 30.
Meanwhile, the Royal Bank of Canada said that recent trading patterns indicate that the Canadian dollar may fall to its lowest level in four months against the US dollar as geopolitical risks such as Ukraine crisis affect investors’ risk appetite.
The loonie closed past C$1.0958 on Tuesday, close to C$1.1052 last touched on April 23. The Canada’s currency rose 0.3 percent to C$1.0925 on Wednesday after the country’s trade surplus rose to C$1.86bn (US$1.69bn) in June, the strongest level since December 2011. To register for a free 2-week subscription to ForexMinute Premium Plan, visit www.forexminute.com/newsletter.
To contact the reporter of this story; Yashu Gola at email@example.com