Chinese currency yuan, also known as the renminbi (RMB), rose against the U.S. dollar by more than 100 basis points in both Chinese mainland and Hong Kong markets on Monday, as foreign institutions were making bullish bets on the yuan with high expectations that RMB will join International Monetary Fund's currency basket before the end of this year,.
In the spot market, onshore yuan, or CNY, closed at 6.3230 per dollar on Monday, 0.35 percent firmer than the previous close. 21st Century Business Herald reported Tuesday the rise was mainly due to overseas buying power of the yuan on some profit taking by previously bearish institutions, as well as large-scale yuan carry trade activity on bets that IMF will include RMB in the special drawing rights basket within 2015.
Such bets reflected a change in foreign investors' attitudes towards the yuan, said traders. "Investors no long believed RMB exchange rates would experience panic fall following China's new foreign-exchange policy; they now know that Aug.11 policy was not aimed at competitive depreciation to boost exports." In mid-August, onshore yuan lost 4.66 percent against the dollar in terms of central parity rate in just four days (Aug. 11- Aug.14) after China's central bank changed the way it calculated daily central parity rate on Aug. 11.
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