(Bloomberg) -- China’s yuan surged for a fourth straight day as bets on easing trade tensions continued to squeeze bears, driving the currency to the strongest level since July. Goldman Sachs Group Inc. boosted its forecasts on the exchange rate.

The yuan jumped as much as 0.48 percent to 6.7340 per U.S. dollar. The currency has rallied 3.3 percent since touching its lowest level in a decade in October on speculation the world’s two largest economies may reach a trade deal and the U.S. may halt its interest-rate hikes. The People’s Bank of China boosted its daily reference rate and the greenback weakened, helping the rally on Monday. Goldman raised forecasts on the yuan, predicting a rise to 6.7 in a year.

"We have increased the probability of a ‘deal’ and ‘status quo’ scenario while reducing the risk of escalation over our forecast horizon," Goldman analysts led by Danny Suwanapruti wrote in a note, referring to conditions on the China-U.S. trade war. "Factors likely to limit excessive yuan strength, even in the event of a pause in trade tensions, include a slowing in Chinese growth combined with a weakening in China’s external balance."

The currency pared gains after China’s trade data trailed analyst estimates. The yuan rose 0.2 percent to 6.7554 per dollar as of 11 a.m. in Shanghai, extending its four-day advance to 1.5 percent. The currency may trade at 6.8 by mid-April, the note said.

To contact the reporter on this story: Tian Chen in Hong Kong at tchen259@bloomberg.net

To contact the editors responsible for this story: Richard Frost at rfrost4@bloomberg.net, Magdalene Fung, Kana Nishizawa

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