Yuan rises to three-month high as thin liquidity magnifies moves

[BEIJING] The onshore yuan rose to the strongest level in more than three months as the People's Bank of China boosted its daily reference rate for the currency amid thin liquidity.

The exchange rate climbed 0.55 per cent to 6.5406 per US dollar, the highest level since Sept 15, as of 5.49 pm in Shanghai. China's central bank boosted the fixing, which limits the yuan's moves by two per cent in either direction, to a three-month high earlier in the day. The transaction volume of the currency dropped for four straight days last week, as traders left the office for the year-end holidays.

China's currency is in line for a gain of 6.2 per cent versus the US dollar in 2017, which would be its best year since 2008. The gains come as the greenback fell and China's government worked to limit capital outflows. The domestic exchange rate is set to remain little changed in the year ahead, ending 2018 at 6.55, according to the median forecast of analysts in a Bloomberg survey.

BLOOMBERG