SHANGHAI—The yuan rose Monday to its strongest level against the dollar in the currency’s modern era as traders bet on the likelihood of long-term appreciation despite the Chinese central bank’s surprise move to keep the exchange rate flat ahead of trading.
The yuan’s rise led to gains in China’s stock market, where hopes of a stronger local currency buoyed demand for index heavyweights such as airlines and metals firms, which would likely benefit from lower yuan-denominated prices for imports of raw materials like fuel and iron ore. Yields on Chinese government bonds and local interest-rate swaps also fell on expectations that a stronger yuan will reduce the need for an imminent interest rate hike.
Full story: China’s Yuan Rises to Highest Level Against Dollar in Modern Era – WSJ.com