Sensex ends 305 points higher on China's Yuan move

21 Jun 2010

1

Equity benchmarks rallied sharply on Monday on the back of uptrend across the globe, which reacted to China's move at the weekend to increase exchange rate flexibility. Indices closed at two-month high.

China's move to end pegging the yuan at a fixed rate to the dollar will strengthen the domestic market, said Richard Gibbs, Global Head, Macquarie Securities, in an exclusive interview to CNBC-TV18. "Commodity markets too will get a fillip from the Chinese move."

Over the weekend, the People's Bank of China said in a statement that the decision to end the yuan's peg was made after the world's third-largest economy improved. However, the Chinese central bank stressed that a substantial appreciation in the currency was "not in China's interests" and that the exchange rate would basically remain stable.

Shanghai rose 2.9% and Hang Seng was up 3%. Nikkei, Straits Times, Kospi and Taiwan gained 1.6-2.4%. European markets were trading 1-1.5% and US index futures were up 1-1.5%, at the time of closing of Indian equities.

Callum Henderson of Standard Chartered Bank said the yuan reform should be positive for Chinese consumption. "That's good news for those who export either manufactured goods or commodities to China."

Henderson expects the rupee to gain in the short-term. "We would expect a retest of 45 per dollar this week, possibly as early as the next one or two days. Below that, we could see a retest of 44 levels, which we saw a few weeks ago." He sees the rupee at 42 per dollar over the next 12 months. The Indian rupee was trading at 45.76 per USD.

Business History Videos

History of hovercraft Part 3...

Today I shall talk a bit more about the military plans for ...

By Kiron Kasbekar | Presenter: Kiron Kasbekar

History of hovercraft Part 2...

In this episode of our history of hovercraft, we shall exam...

By Kiron Kasbekar | Presenter: Kiron Kasbekar

History of Hovercraft Part 1...

If you’ve been a James Bond movie fan, you may recall seein...

By Kiron Kasbekar | Presenter: Kiron Kasbekar

History of Trams in India | ...

The video I am presenting to you is based on a script writt...

By Aniket Gupta | Presenter: Sheetal Gaikwad

view more