China's yuan advances as economic growth beats estimates

[BEIJING] The yuan advanced as China's second-quarter gross domestic product beat estimates, adding to signs of a recovery in the world's second-largest economy.

GDP expanded 6.7 per cent in the April-June period, compared with the median estimate of 6.6 per cent, according to data released Friday. Figures earlier this month showed China's factory-gate deflation eased for the sixth month in a row in June, while exports declined less than analysts forecast.

The onshore yuan rose 0.06 per cent to 6.6847 a US dollar as of 10:08 am in Shanghai, according to China Foreign Exchange Trade System prices. The currency traded in Hong Kong's overseas market was little changed for the day and up 0.16 per cent for the week. The People's Bank of China strengthened the yuan's daily fixing, which restricts onshore moves to 2 per cent on either side, by 0.06 per cent.

"China's GDP data for the second quarter shows that fundamentals are stabilising," said Ken Cheung, an Asian currency strategist at Mizuho Bank Ltd in Hong Kong.

"This should make yuan-denominated assets more attractive and encourage some capital inflows. The big picture is that China's economy growth remains stable."

Other data released Friday show industrial production climbed 6.2 per cent in June from a year earlier, compared to 6 per cent in May and economists' estimates for 5.9 per cent. Retail sales rose 10.6 per cent last month, while fixed-asset investment slowed to 9 per cent in the January-June period.

BLOOMBERG