China's Yuan Toppled From Two-Year High as Trade Data Surprises February 8, 2018, Surge in imports reduced surplus, showing drop in yuan...
China's Yuan Toppled From Two-Year High as Trade Data Surprises
February 8, 2018,
The yuan weakened as much as 1.2 percent in Shanghai, touching as low as 6.3550 per dollar on Thursday. The slump marks a reversal for the managed currency, which acts as an anchor for the wider Asian region and has been rallying amid the dollar’s retreat.
Already down at the start of the trading day, the yuan extended losses after China said the surplus shrank to $20.34 billion from $54.69 billion last month.
The surplus was much smaller than economists had expected, and was affected by a surge in imports on rising commodity prices as well as seasonal effects related to the Chinese New Year holiday. A narrower surplus indicates reduced demand for the currency.
What Our Economists Say...
“As China’s foreign-exchange reserves have been stabilizing and the yuan has been strong, pressure on capital outflows has eased. In the meantime, the leadership indicated that China would be more open to the global investors this year. All these show that there is room to loosen the curbs,” says Fielding Chen, China economist for Bloomberg Economics.
A favorite target of President Donald Trump, China’s trade surplus with the U.S. narrowed to $21.9 billion last month as exports rose 12.7 percent and imports surged 26.5 percent. That followed a Commerce Department report this week showing the U.S. trade gap in goods with the Asian power surged 8.1 percent last year.
Before Thursday’s slump, the yuan had outperformed other currencies against the greenback on optimism over the Chinese economy and the conversion of foreign-currency funds accumulated during the three years of depreciation through 2016.
Source: Bloomberg
February 8, 2018,
- Surge in imports reduced surplus, showing drop in yuan demand
- There have been signs officials may act to stymie appreciation
The yuan weakened as much as 1.2 percent in Shanghai, touching as low as 6.3550 per dollar on Thursday. The slump marks a reversal for the managed currency, which acts as an anchor for the wider Asian region and has been rallying amid the dollar’s retreat.
Already down at the start of the trading day, the yuan extended losses after China said the surplus shrank to $20.34 billion from $54.69 billion last month.
The surplus was much smaller than economists had expected, and was affected by a surge in imports on rising commodity prices as well as seasonal effects related to the Chinese New Year holiday. A narrower surplus indicates reduced demand for the currency.
What Our Economists Say...
“As China’s foreign-exchange reserves have been stabilizing and the yuan has been strong, pressure on capital outflows has eased. In the meantime, the leadership indicated that China would be more open to the global investors this year. All these show that there is room to loosen the curbs,” says Fielding Chen, China economist for Bloomberg Economics.
A favorite target of President Donald Trump, China’s trade surplus with the U.S. narrowed to $21.9 billion last month as exports rose 12.7 percent and imports surged 26.5 percent. That followed a Commerce Department report this week showing the U.S. trade gap in goods with the Asian power surged 8.1 percent last year.
Before Thursday’s slump, the yuan had outperformed other currencies against the greenback on optimism over the Chinese economy and the conversion of foreign-currency funds accumulated during the three years of depreciation through 2016.
Source: Bloomberg
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