SHANGHAI: China’s yuan surged higher for a fourth day, on track for its best week since a revaluation a decade ago as Beijing steps in to the markets to drive the currency higher and kick out speculators betting on losses as the economy deteriorates.
The yuan has gained 1.3% against the U.S. dollar since Monday, pushing the currency to a three-month high and back into positive territory for the year. The central bank has been setting a morning reference rate higher most days while traders say Chinese state banks are also buying the currency to shore up its value.
The sudden gains have taken traders by surprise after four months of losses, serving as a reminder that Beijing still keeps a firm grip on the tightly-controlled currency and won’t allow heavy losses or one-way speculation. Capital has also been flowing out of China this year as the yuan weakens and worries linger that further currency losses could exacerbate that and destabilize the already fragile financial system.
