BUZZ-COMMENT-Stability of China's currency bodes well for its future

Feb 12 (Reuters) - China's currency has traded stably throughout a period of great turmoil for other Chinese assets which may encourage investors to hold it. Like many other currencies, the yuan is quite weak versus the dollar thanks to a big rise in U.S. interest rates, but it is trading close to the middle of its long-term extremes versus the basket of currencies that help to determine policy. This year the yuan is virtually unchanged versus the currency basket and has gained around 2% versus the basket during the big sell-off for China's main stock market. One factor likely favouring the yuan is the lack of perceived safer currencies other than the dollar. Undermined by policies that may drive it even lower, the yen collapsed to a record low in November and has slumped this year. Swiss FX markets lack depth and for years the central bank has opposed a rise in the franc's value. While the euro is the second most popular currency in global reserves, it's never challenged the dollar's reserve status and probably never will. Gold is illiquid and it's also very expensive following the recent surge to a record high and it is has no interest rate to support it. As the currency of the world's second-largest economy, a stable yuan could start to draw the attention of investors and reserve managers currently starved of choice. For more click on FXBUZ <^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^ CNY vs basket and SSEC https://tmsnrt.rs/48gsJ9M ^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^> (Jeremy Boulton is a Reuters market analyst. The views expressed are his own) (([email protected]))