RMB appreciation spurs copper buying spree

The price of copper rose in London and New York as gains in the value of the renminbi spurred buying from China, the world’s biggest market for the metal, Bloomberg reported. China’s currency strengthened beyond 6.4 to the dollar on August 11, the first time since 1993, helped by the US Federal Reserve’s pledge to preserve rock-bottom interest rates until at least mid-2013. That opened opportunities for arbitrage in copper, with traders purchasing the commodity on the London Metal Exchange with the intent of reselling it for about US$55 a metric ton more in Shanghai. Copper for September delivery rose 2.6% to US$3.991 a pound as of 7:28 am on the Comex in New York, while three-month contracts on the London Metals Exchange rose 2.7% to US$8,827 a ton. China probably worked through half a million tons of its copper stockpiles earlier this year due to tighter credit policies, according to estimates by UBS AG (UBS.NYSE).