2012-03-22

Yuan has a big one-day move, but forwards head in the opposite direction

The renminbi had a volatile day of trading, gaining 0.02 versus the U.S. dollar on the day. Dow Jones Newswire reports China Yuan Up Late On PBOC's Unexpected Stronger Guidance
China's yuan rose against the U.S. dollar Thursday, after the central bank guided the yuan unexpectedly stronger via a daily reference rate in a bid to curb recent selling pressure on its currency amid renewed concerns about the country's economic outlook and capital outflows.

..."The PBOC may want to use the stronger fixing to boost international investors' confidence in the yuan and China's economy, especially as worries about capital flight are growing again," said a trader with a foreign bank in Shanghai.

...Offshore, one-year dollar-yuan nondeliverable forwards rose to 6.3460/6.3510 from 6.3315/6.3415 late Wednesday, and implying a 0.7% decline by the yuan against the dollar over the next year.
Below is the one-day chart and the three-month chart. I added a line on the three-month to show today's gain.



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