The yuan surged in onshore trading after China’s central bank raised its daily reference rate by the most since November.
The currency strengthened as much as 0.25 percent to an almost four-week high of 6.4910 a dollar, according to China Foreign Exchange Trade System prices. The offshore rate in Hong Kong climbed 0.1 percent to 6.4986 as of 10:02 a.m. local time. The People’s Bank of China raised its fixing, which restricts onshore moves to 2 percent on either side, by 0.34 percent to 6.4905.
The magnitude of the fixing move surprised Australia & New Zealand Banking Group Ltd., with senior currency strategist Khoon Goh putting it down largely to a euro rally and dollar decline overnight. The European currency jumped the most since Feb. 3 after central bank President Mario Draghi said he didn’t see any need to cut interest rates further, while a gauge of dollar strength fell 0.54 percent.
“Maybe the PBOC is trying to preempt weak economic data that’s coming out over the weekend,” said Andy Ji, a Singapore-based foreign-exchange strategist at Commonwealth Bank of Australia. “We’ve seen some rather opaque and volatile fixings in the past three sessions.”
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The Chinese government will release key data on Saturday and PBOC Governor Zhou Xiaochuan and his top deputies will hold an annual press conference. Industrial production and fixed-asset investment are projected to show a continued slowdown, according to economists polled by Bloomberg.
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