China widens ability of currency to rise and fall against the US dollar

Story link: China widens ability of currency to rise and fall against the US dollar

China’s central bank increased the band in which the renminbi can rise and fall against the US dollar in a session from 0.3 percent to 0.5 percent on Friday. The move was interpreted by most analysts as in line with Beijing’s stated policy of strengthening its currency slowly. It is seen as being a largely positive move for Asian currencies in general.

The Japanese yen did, indeed, rise 0.4 percent versus the US dollar to ¥120.70 immediately after the People’s Bank of China announced its move, as well as an interest rate hike. The yen also gained on the euro and sterling, up 0.4 percent to ¥162.97 and 0.5 percent to ¥238.29 respectively. By midday in New York, however, the yen was down 0.9 percent on the week to ¥121.23 in relation to the greenback, while the Japanese currency dropped 0.5 percent to ¥163.52 against the euro and fell 0.4 percent to ¥239.19 versus the pound.

The US dollar was stronger on the week, adding 0.2 percent to $1.3503 against the euro and 0.3 percent to $1.9757 in relation to sterling. The gains came despite a consumer price inflation report that was weaker than had been anticipated. On the other hand, the Canadian dollar gained on the greenback, adding 2 percent on the week to $1.0883. In addition, the Brazilian real added 2.8 percent in relation to the US dollar this week to R$1.9619, the Philippline peso was 1.6 percent higher to 46.38 pesos to the dollar, and the Turkish lira gained 1.4 percent to TL1.3255 versus the dollar.

Sterling, meanwhile, dropped 0.1 percent to £0.6833 against the euro.