Yuan surges on dollar amid signs of tolerance

The People's Bank of China set the yuan's daily fixing 0.13 per cent stronger at 6.3797 per US dollar, the highest rate since July 2005.

China needs to keep monetary policy tight and balance growth with inflation, International Monetary Fund deputy managing director Zhu Min said yesterday at the World Economic Forum in the northeastern Chinese city of Dalian.

Patrick Cheng, a Hong Kong-based analyst at Haitong International Securities Co, said: "The trajectory of gradual yuan appreciation will continue as China's economic growth remains relatively stable."

The yuan strengthened 0.13 per cent yesterday and 0.07 per cent this week to close at 6.3834 per dollar in Shanghai, according to the China Foreign Exchange Trade System. The currency is allowed to trade up to 0.5 per cent on either side of the daily reference rate.

In Hong Kong's offshore market, the yuan rose 0.1 per cent yesterday to 6.3770, limiting this week's loss to 0.24 per cent.

Twelve-month non-deliverable forwards climbed 0.08 per cent to 6.3245, a 0.9-per-cent premium to the onshore spot rate, according to data compiled by Bloomberg. The contracts fell 0.5 per cent this week, the most since May.

Consumer prices in China rose 6.2 per cent in August from a year earlier, after having climbed 6.5 per cent in July, official data show. The increase in July was the most in three years.