Investors betting on yuan appreciation

Investors are wagering that a rebound in China’s growth will lead the government to further allow the renminbi to appreciate, with the currency already strengthening within official limitations, The Wall Street Journal reported. Onshore yuan hit RMB6.213 to the US dollar on Monday, a record high going back to 1994 when the currency trading system was first launched. The renminbi has appreciated 0.2% since January 1, compared to a 1% rise for the full year of 2012. The value of the offshore yuan in Hong Kong, which is allowed to trade freely, in contrast to the onshore yuan which is restricted to at trading band, rose 0.6% since January 1. The People’s Bank of China has set increasingly high official rates against the dollar in recent days. Analysts and investors consider further rises in the yuan likely, as the government moves to reduce imported goods prices in a bid to offset consumers’ increasing costs.