Yuan forwards jumped the most since January 2012 after China’s trade surplus almost doubled and the central bank boosted the currency’s daily reference rate.
The euro fell for a third week as measures of manufacturing and business confidence in the region signaled uneven economic growth, bolstering bets on further European Central Bank stimulus in June.
China’s benchmark money-market rate fell to the lowest this year on speculation debt maturing in March will add funds to the banking system.
South Korea and Taiwan have declared a cease-fire in Asia’s currency wars.
Chinese policy makers have been saying since February that two-way swings in the yuan are the “new norm.” A surprise surge in the currency shows that they mean it.
Hong Kong should start a yuan deliverable forwards market to boost its ability to compete with Shanghai in renminbi trade and investment, said Frances Cheung , a senior strategist at Credit Agricole CIB.
China’s money-market rates fell as the central bank drained less cash from the financial system than it added this week.
Yuan 12-month non-deliverable forwards rose ahead of inflation data due Dec. 11 that may prompt China’s central bank to raise interest rates.
Asian currencies had their biggest weekly gain since March after the Philippines won a surprise credit-rating upgrade and Malaysia’s ringgit rallied on the prospect of an interest-rate increase.
"The liquidity tightness that market participants had been preparing for did not materialize, hence rates are back down."
- Frances Cheung on Jul 24, 2014