A stock indicator shows the benchmark Shanghai Composite Index on Jan 13, 2016.
Advertisement
― File picHONG KONG, Jan 13 ― The yuan traded in Hong Kong headed for the biggest five-day gain on record as China’s central bank steadied the currency’s fixing and intensified efforts to curb outflows.
The CSI300 index .CSI300 of the largest listed companies in Shanghai and Shenzhen rose 0.7 percent to 3,215.71 points, while the Shanghai Composite Index .SSEC gained 0.2 percent to 3,022.86 points.
The Japanese currency was also weaker against the euro EURJPY, +0.21% which gained to ¥128.10 from ¥127.80 late Tuesday.
While investors harbor suspicions about the reliability of the data, on the surface they offered hope that world trade flows were at least stabilizing after a dismal 2015.
Fitch Ratings said the government was grappling with a “sharpening dilemma between a perceived need to keep interest rates low to help the economy manage its debt burden, and downward pressure on the Chinese yuan and foreign reserves”.
Oil prices rose for the first time in eight sessions on Wednesday as an unexpected draw in weekly U.S. crude oil inventories and positive Chinese trade data gave investors reasons to buy crude futures. The ringgit slipped 0.7 percent, while South Korea’s won lost 0.1 percent, the Australian dollar slipped 0.7 percent and the Indonesian rupiah shed 0.4 percent. The December figure was better than a median forecast by The Wall Street Journal for an 8 per cent decrease.
Japan’s Nikkei bounced 1.8 per cent on Wednesday from a near-one-year trough.
The swift movements have become common on the volatile index, which has been hammered by a string of weak economic data out of China, while authorities’ bungling of last week’s rout has also sowed doubt.
“The whole market is continuing to revolve around China”, said Jason Leinwand, managing director at Riverside Risk Advisors.
The central bank has also engineered a huge leap in yuan borrowing rates in Hong Kong, essentially making it prohibitively expensive to short the currency. The stock dropped 75 cents to $7.25.
Beijing began on Friday to rein in its currency by guiding it slightly stronger against the U.S. dollar. The PBOC’s intervention was aimed at maintaining a stable currency and preventing speculation and arbitrage, said people familiar with the matter, who asked not to be identified because the move hasn’t been made public.
The People’s Bank of China (PBOC) held the line for a fourth straight session by setting the yuan midpoint rate at 6.5630 per dollar prior to market open on Wednesday, virtually unchanged from the firmer fixes of the previous two days. The onshore yuan can trade up or down within 2% of the bank’s daily guidance.
“A higher HIBOR rate is effective for narrowing the gap between the offshore and onshore yuan rates, which leaves less space for speculators”, Liu Dongliang, a senior analyst at China Merchants Bank, told the Global Times on Tuesday.
Advertisement
Shares of Apple rose 1.5 per cent on a broker upgrade, underpinning the broader market.
