SHANGHAI: Asian stock markets rose Monday as investors took heart from China’s announcement over the weekend that it was ending its currency’s two-year peg to the dollar, though there was no immediate change in the yuan’s exchange rate.
Japan’s benchmark Nikkei 225 stock index gained 177.18 points, or 1.8 percent, to 10,172.20 in the morning session.
South Korea’s Kospi rose 0.9 percent to 1,726.86, and Australia’s S&P/ASX 200 was up 0.7 percent at 4,604.30.
Hong Kong’s Hang Seng index climbed 1.4 percent to 20,571.40. China’s Shanghai Composite Index added 0.6 percent to 2,527.22. Benchmarks in Singapore and Taiwan all advanced in early trading.
Investors gained confidence from Beijing’s announcement Saturday that it would determine the exchange rate from multiple currencies, rather than the dollar alone, analysts said.
The yuan’s value has been pegged to the U.S. dollar since the global financial crisis took hold in 2008, causing major friction with countries who say it is undervalued for China’s own benefit.
The Chinese central bank also said it plans no major exchange rate adjustments, dousing speculation over possible one-off moves in the yuan’s dollar value. That reduces uncertainty, allowing some investors to plunge back in after weeks of holding back.
The impact of any change in the yuan’s value will be mixed, he noted, with exporters likely to suffer and importers and airlines, whose debts are denominated in U.S. dollars, gaining.
The yuan’s value has been pegged to the U.S. dollar for two years, causing friction with countries who say it is undervalued for China’s own benefit. A stronger yuan would make Chinese exports more expensive and bring relief to foreign manufacturers that have struggled to compete.
The official exchange rate for China’s currency stood unchanged Monday morning in line with the central bank’s warning the value of the yuan would not dramatically rise after its two-year peg to the dollar ended.
The People’s Bank of China left the yuan’s parity rate against the U.S. dollar unchanged Monday at 6.8275, the official Xinhua News Agency said. The rate is a weighted average of prices given by market makers, excluding highest and lowest offers.
The central bank said it is keeping the yuan’s current 0.5 percent trading band intact, but will rely more on a basket of currencies that includes the U.S. dollar to determine the exchange rate, rather than the dollar alone.
In currencies, the dollar rose to 90.47 yen in Tokyo on Monday morning from 90.36 yen in New York late Friday. The euro stood at $1.2432, little changed from $1.2435.
