The Chinese yuan’s surge to a 20-year high signals policy makers are becoming more willing to let investment and trade flows determine the exchange rate as the nation’s trade surplus swells to the biggest since 2009.
The yuan climbed 0.2 percent to close at 6.0723 per dollar in Shanghai, after touching 6.0713 earlier, the strongest level since 1993, China Foreign Exchange Trade System prices show. Twelve-month non-deliverable forwards rose 0.3 percent to an all-time high of 6.1195 per dollar at 11:10 a.m. in New York, according to data compiled by Bloomberg.
China’s trade surplus expanded to $33.8 billion, the largest since January 2009, as exports surged, the custom data showed yesterday. The People’s Bank of China will “basically” end intervention in the currency market and widen the trading band where the yuan is allowed to fluctuate in an “orderly way,” central bank Governor Zhou Xiaochuan said last month.