HONG KONG Jan 8 The Chinese currency traded
outside the country's borders hit a record high on Wednesday,
driven by seasonal yuan demand at the beginning of the year and
increased bets on further currency appreciation.
The yuan rose a solid 2.9 percent against the dollar in 2013
and traders see similar gains this year after the central bank
promised to tone down its interventionist policies in the
foreign exchange markets.
A wave of structured-product selling by banks, the net
result of which is the buying of the Chinese currency, also
buoyed the yuan.
"Usually, at the start of year we see a lot of options
products being marketed and sold to clients where the delta
hedging requires selling USD and buying CNH," said a trader at a
Chinese bank in Hong Kong.
The offshore yuan or "CNH" as it is more widely known
, briefly hit 6.0345 in morning trade, widening its
premium over the onshore yuan to 170 pips, compared
to only 9 pips on Jan. 2.
The gap between the offshore yuan and its non-deliverable
forward counterpart in the forwards market also widened.
The People's Bank of China fixed the yuan's mid-point
versus the dollar at 6.1079 on Wednesday, 0.06
percent weaker than the previous day.
Sentiment toward the yuan remains positive despite signs
that China's economy lost some steam in late 2013, with long
positions in the currency rising to the highest level since late
May last year, a Reuters poll showed.