RMB forward contracts rise on appreciation expectations

Renminbi forward contracts have reached a one-month high as US government officials intensify pressure on China to resume currency appreciation, Bloomberg reported. Twelve-month non-deliverable forwards rose 0.3% to 6.7631 per dollar in Hong Kong Friday morning. The contracts project 1% appreciation from the spot rate of 6.8294. US Treasury Secretary Timothy Geithner told the Senate Finance Committee Thursday that China’s currency policy prevents a balanced global recovery. Meanwhile, Senator Lindsay Graham said the legislation he is sponsoring aimed at forcing revaluation has “huge” support in Congress. China’s trade surplus grew sharply in May on the back of the strongest monthly gain in exports in more than six years. Data published by the US Commerce Department Thursday showed that the country’s trade deficit widened to US$40.29 billion in April as exports fell by US$813 million. The deficit with China specifically expanded to US$19.31 billion from US$16.9 billion in March.