“The yuan strengthened beyond 6.21 per dollar for the first time in 19 years after the central bank raised the currency’s reference rate and as a bailout deal for Cyprus spurred demand for emerging-market assets.
The People’s Bank of China increased the daily fixing by 0.03 percent to 6.2692 per dollar today, the strongest level since Jan. 15. The currencies of Asia’s developing economies appreciated today as euro-area finance ministers approved a bailout for Cyprus. China will maintain a “reasonable” level of investment as it targets a pickup in domestic demand, the China Securities Journal reported today, citing National Development and Reform Commission Vice Chairman Zhu Zhixin.
“A stronger exchange rate could help China tame inflationary pressures and boost domestic consumption by lowering prices of imports,” said Daniel Chan, a Hong Kong- based executive vice president at Glory Sky Global Markets Ltd. “The yuan is also hailed as a stable currency and hence has attracted some fund flows in times of uncertainty.”
The yuan gained 0.02 percent to close at 6.2107 per dollar inShanghai, prices from China Foreign Exchange Trade System show. It touched 6.2095 earlier, the strongest level since the government unified official and market exchange rates at the end of 1993. The currency traded at a 0.95 percent premium to the reference rate, near the 1 percent limit allowed by the central bank.
