China conducts currency stress tests, driving yuan forwards up

China is conducting yuan stress tests at more than 1,000 companies in 12 industries, Zhang Wei, vice chairman of the China Council for the Promotion of International Trade, said at a briefing in Beijing Thursday. U.S. senators including Charles Schumer and Lindsey Graham revived legislation this week that would require the U.S. to determine if a nation's currency is misaligned and would make it easier to impose import duties if the currency was deemed to be undervalued. Government bonds rose.

"It's only a matter of time," said Emmanuel Ng, a currency strategist at Oversea-Chinese Banking Corp. in Singapore. "We expect the yuan to rise around the middle of this year."

The yuan's 12-month forwards gained 0.1 percent to 6.6660 per dollar as of 5:30 p.m. in Hong Kong, according to data compiled by Bloomberg. The contracts reflect bets the currency will strengthen 2.4 percent from the spot rate of 6.8261.

The one-month contract was little changed at 6.8187, reflecting traders bets that "Chinese authorities will probably not yield to foreign pressure" immediately, said Ng.

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