The World Bank noted an appreciating Yuan would give China more flexibility in terms of monetary policy, but Beijing has been reluctant to let its currency rise against the U.S. Dollar and other major currencies for fear of hurting Chinese exporters. A stronger Yuan would allow China to ease the specter of rising inflation.
The yuan’s 12-month non-deliverable forwards rose 0.6 percent to 6.7081 per dollar as of 5:31 p.m. in Hong Kong, the biggest increase since Dec. 22, according to data compiled by Bloomberg. The contracts have soared almost 1% this week as traders bet the Yuan will rise nearly 2% from current spot prices.
China halted Yuan appreciation in 2008 in the midst of the global economic crisis. The Yuan had gained 21% from 2005-2007.