The yuan ranks in the top three on Pacific Investment Management Co.’s emerging-market investment radar, partly because of a $3.66 trillion currency pile that China’s central bank this week described as excessive.
China’s planned economic reforms are burnishing the yuan’s credentials as a currency of global trade, pushing its offshore rate to the highest versus its domestic value in 10 months while damping volatility.
The dollar will reverse recent gains versus the euro and the yen in coming months as the Federal Reserve pares monetary stimulus at a slower pace than the market expects, Bank of New York Mellon Corp. said.
China’s interest-rate increases and U.S. Treasury Secretary Timothy F. Geithner ’s commitment to a strong dollar suggest the nations may have reached a currency accord, Bank of New York Mellon Corp. said.
The pound rose to a two-week high against the euro as European leaders clashed on banking plans and a report showed German business confidence declined, boosting demand for the relative safety of the U.K. currency.
The euro fell against the yen to the weakest level in more than 11 years as investors sought the relative safety of the Japanese currency and pushed German bond yields to record lows amid a deepening of Europe’s debt crisis.