The Chinese yuan rose sharply on Friday morning in the offshore market, hitting its highest level in three months, as traders suspected the People’s Bank of China (PBOC) had intervened to prop up the currency and squeeze short sellers to defy the downgrade of China’s credit ratings by Moody’s Investors Service.
In Hong Kong, the US dollar lost as much as 0.2 per cent against the offshore yuan, trading at 6.836, the worst level since February. By 11.30 am, the US dollar bought 6.83401 yuan, down 0.1 per cent from 6.849 late Thursday.
The spot yuan also advanced in Shanghai. The US currency traded at 6.8579 per yuan at 11.30 am, down 0.2 per cent from 6.8685 late Thursday.
“In defiance to the Moody’s downgrade, the state-owned banks are big sellers of the dollar as the PBOC wants its currency strong and stable,” said Stephen Innes, senior trader at Oanda Asia Pacific.