Yuan forwards ease after Wen: inflation falling

Yuan forwards declined last week after Premier Wen Jiabao said measures to cool inflation are working, easing pressure on policy makers to allow a stronger currency. China's efforts to curb prices have worked, Wen wrote in an opinion piece in Financial Times newspaper Friday. Commodity prices reached a four-month low on Friday and have dropped 7.7 per cent in June, according to the Standard & Poor's GSCI index. The International Energy Agency announced plans to release emergency crude-oil supplies, and US jobless claims rose more than forecast data showed on Friday. "You can see commodity prices falling and in the second half of the year, global inflation will come down," said Patrick Cheng, a Hong Kong-based foreign exchange analyst with Haitong International Securities Co. "China's yuan is not going to be as strong as in the first half of this year." Twelve-month non-deliverable forwards fell 0.23 per cent last week to 6.3919 per dollar in Hong Kong, according to data compiled by Bloomberg. The contract was at a 1.3 per cent premium to the onshore spot rate. China's consumer prices rose 5.5 per cent in May from a year earlier, the most in 34 months. The People's Bank of China set the yuan's reference rate weaker for a second day on Friday, fixing it at 6.4742 per dollar. The yuan isn't allowed to move more than 0.5 per cent on either side of the daily fixing. The yuan gained 0.02 per cent last week to 6.4730 per dollar in Shanghai, according to the China Foreign Exchange Trade System. The currency fell 0.08 per cent Thursday. In Hong Kong's offshore market, the yuan dropped 0.02 per cent for the week and on Friday to 6.4690 per dollar. From / Gulf News