Yuan extends rally, set for best day since June

Chinese currency is rallying up pretty fast and is set to make the best return since June last year. The currency rallied up by a fair margin o the stock market on Tuesday.

Experts say that this was possible due to the selling of the corporate dollar and the markets were more concerned about the tensions of confrontation between the Us and Iran.

On the Shanghai stock market at the end of trading on Tuesday, the Yuan finished at 6.9376 against the dollar.

  If the Yuan retains this pace it will gain more than 0.57% till late night close. And this would be the largest comeback since June 20 last year.

Speaking to the media Stuart Oakley the head of global flow FX at Nomura said that a risk-off mode worked in the minds of the people for about a day but then the people realized that the global interest rates are still too low and that will always be a major factor. The currencies of other Asian countries like the Taiwanese dollar and the Indonesian rupiah also climbed.

Before the start of the market, the People’s Bank of China set the Yuan at 6.969 against the US dollar up from 6.9718 by a margin of 0.04%.

Export traders also contributed to the rise of the Yuan by selling corporate dollar. Chinese companies would sell all their foreign currencies to convert them into the domestic currency before the Lunar New Year which falls on January 25 for making various payments.

Many institutions that held huge volumes of US dollar were forced to sell it off to avoid further loses at 6.95 a dollar. The local trades believed that the selling of corporate dollar by the Chinese state-owned banks was not done to counteract the weakness of the Yuan. The selling of the dollars by the corporate institutions and banks pushed the Yuan past its 200-day average trading value.