Date: Monday 21 Jun 2010
Asian stock markets were lifted by China's weekend announcement that it would allow the yuan more flexibility after a two-year peg against the dollar.The People’s Bank of China said it would end the currency peg started during the global financial crisis to help protect exporters. The yuan would be allowed to make a 'modest appreciation.'
The announcement, which comes ahead of this month's G20 meeting, has also soothed jitters about a potential trade war between the US and China.
China has been under pressure from countries such as the US and India to change its currency policy which, they argued, has given China's exporters an unfair advantage over foreign competitors.
Shares in robot maker Fanuc rallied 4.6% after the announcement on hopes of increased exports to China. Hitachi Construction Machinery also soared 6.4%.
Trading house Mitsubishi Corp jumped 5.1% in Tokyo on the back of higher commodity prices. Jiangxi Copper surged 5.7% in Hong Kong.
The benchmark Nikkei 225 index closed up 2.4% or 242 points at 10,238 in Tokyo.
The Hang Seng index rose over 3% on Monday, supported by hopes that the yuan exchange-rate plan would boost corporate growth in China.
Real estate stocks such as Hang Lung Properties rose strongly. Elsewhere shares of Nine Dragons Paper shot up nearly 9% on hopes that a strong yuan would reduce import costs.The Hang Seng index closed up 3.08% or 625 points at 20,912 in Hong Kong
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