By James Regan April 6 (Bloomberg) — Yuan forwards rose to the strongest level in more than 10 weeks on speculation the U.S. decision to delay a report on global foreign-exchange policies will make China more willing to let the currency resume appreciation. Treasury Secretary Timothy F. Geithner on April 3 announced the delay of the report, scheduled for April 15, and urged China to move toward a more flexible currency. He said a series of meetings over the next three months will be “critical” to bringing policy changes that lead to a stronger, “more balanced” global economy. Twelve-month non-deliverable forwards advanced as much as 0.5 percent to 6.6165 per dollar, the strongest they have been since Jan. 21, before trading little changed at 6.6456 as of 8:16 a.m. in Singapore. The contracts reflect bets the currency will climb 2.7 percent from the spot rate of 6.8256, according to data compiled by Bloomberg. Geithner faces demands from Congress to label China a currency manipulator for keeping the value of the yuan little changed from about 6.83 to the dollar for almost two years, a policy that some U.S. lawmakers say gives Chinese exporters an unfair advantage. China may report on April 10 that exports increased for a fourth month in March, extending the recovery from a slump that lasted more than a year, according to the median estimate in a Bloomberg News survey of economists. Overseas sales probably climbed 26.7 percent last month from a year earlier following a 45.7 percent gain in February, the survey showed. Weaker Dollar China has to keep buying dollars to keep its currency from strengthening and consequently is the world’s largest foreign owner of U.S. Treasuries, with holdings valued at $889 billion at the end of January. Those investments will lose value as the greenback weakens and U.S. inflation picks up, Yu Yongding , a former adviser to the People’s Bank of China, wrote in an opinion piece for The Australian Financial Review today. The dollar has declined against all but two of the world’s 16 most-used currencies in the past year and consumer prices in the world’s biggest economy increased 2.1 percent from a year earlier in February. “There is no question whatsoever that the U.S. dollar will go south in the long run,” he wrote. “Unless the U.S. economy improves its trade balance, the dollar will fall. But the U.S. cannot improve its trade balance unless the dollar falls.” For Related News and Information: Top currency news: TOP FRX News on China’s currency: TNI CHINA FRX BN Stories on China economy: TNI CHINA ECO BN
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Yuan Forwards Rise to 10-Week High After Geithner Delays Currency Report
