Offshore Yuan Snaps Six-Day Drop on Signs of Stabilizing Growth

The offshore yuan broke a six-day run of declines after data released over the weekend boosted optimism on the economy as the dollar fell.

Industrial profits climbed for the first time in eight months in the January-February period, according to official data published on Sunday. The economy is showing early signs of stabilization, reducing the need for further cuts in benchmark interest rates, China International Capital Corp. economists wrote in a March 27 note. The Bloomberg Dollar Spot Index dropped on Monday, after advancing by the most since November last week.

The yuan traded in Hong Kong gained 0.07 percent to 6.5212 a dollar as of 5:15 p.m. in Hong Kong, after falling 0.05 percent earlier, prices compiled by Bloomberg show. The currency in Shanghai declined 0.02 percent to 6.5165, according to China Foreign Exchange Exchange An exchange is known as a marketplace that supports the trading of derivatives, commodities, securities, and other financial instruments.Generally, an exchange is accessible through a digital platform or sometimes at a tangible address where investors organize to perform trading. Among the chief responsibilities of an exchange would be to uphold honest and fair-trading practices. These are instrumental in making sure that the distribution of supported security rates on that exchange are effectiv An exchange is known as a marketplace that supports the trading of derivatives, commodities, securities, and other financial instruments.Generally, an exchange is accessible through a digital platform or sometimes at a tangible address where investors organize to perform trading. Among the chief responsibilities of an exchange would be to uphold honest and fair-trading practices. These are instrumental in making sure that the distribution of supported security rates on that exchange are effectiv Read this Term Trade System prices. The People’s Bank of China cut its fixing, which limits onshore moves to 2 percent on either side, to a three-week low of 6.5232.

“The industrial profits data released over the weekend are pretty good, indicating early signs of improvement in economic fundamentals,” said Tommy Xie, Singapore-based economist at Oversea-Chinese Banking Corp. “The gain in the afternoon is also likely a result of the dollar move.”

Rate Outlook

Oil processing, electrical machinery and food companies spearheaded the recovery in industrial profits, with 28 of 41 industry groups posting higher incomes. The optimism was tempered by increasing debt and growing inventories, and by the statistics bureau flagging a low base effect.

The CFETS RMB Index, which China uses to measure the yuan’s performance against 13 currencies, rose 0.11 percent from a week earlier to 98.16 on Friday, according to official data released Monday.

Increasing the yuan’s flexibility now against the basket of currencies would be wise as the dollar is showing weakness and depreciation pressure on China’s currency is easing, Chinese Academy of Social Sciences researcher Zhang Ming wrote in an article in Caixin.com on March 26.

In the money markets, the seven-day repurchase rate, a gauge of interbank funding availability, climbed three basis points to 2.32 percent, according to National Interbank Funding Center prices. The Yield Yield A yield is defined as the earnings generated by an investment or security over a particular time period. This is in typically displayed in percentage terms and is in the form of interest or dividends received from it.Yields do not include the price variations, which differentiates it from the total return. As such, a yield applies to various stated rates of return on stocks, fixed income instruments such as bonds, and other types of investment products.Yields can be calculated as a ratio or as a A yield is defined as the earnings generated by an investment or security over a particular time period. This is in typically displayed in percentage terms and is in the form of interest or dividends received from it.Yields do not include the price variations, which differentiates it from the total return. As such, a yield applies to various stated rates of return on stocks, fixed income instruments such as bonds, and other types of investment products.Yields can be calculated as a ratio or as a Read this Term on government notes due January 2026 rose five basis points to 2.89 percent.

To contact Bloomberg News staff for this story: Helen Sun in Shanghai at hsun30@bloomberg.net, Tian Chen in Beijing at tchen259@bloomberg.net. To contact the editors responsible for this story: Richard Frost at rfrost4@bloomberg.net, Robin Ganguly, Allen Wan

By: Bloomberg News

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