China’s yuan rose to a 20-year high after the central bank raised the currency’s daily reference rate to a record and as U.S. jobs data tempered concern the Federal Reserve will cut stimulus further.
The People’s Bank of China strengthened the daily fixing by 0.1 percent today to 6.0950 per dollar, the highest since a peg to the greenback was scrapped in July 2005. Employers in the world’s largest economy added 74,000 workers in December, the least since January 2011, the Labor Department said on Jan. 10. China’s had a trade surplus of $25.6 billion in December, according to official figures released Jan. 10.
“Exports are doing relatively well and the trade balance is still exerting pressure for yuan appreciation,” said Sean Yokota, head of Asian strategy in Singapore at Skandinaviska Enskilda Banken AB. “The second thing is, China has in the past bought the dollar and Treasuries to prevent yuan appreciation. Now, you don’t want to be accumulating Treasuries” with the Fed cutting stimulus, he said.
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