China’s Yuan Set for Smallest Monthly Gain in a Year on Exports
China’s yuan headed for its smallest monthly gain in more than a year on speculation the government will aim to keep the currency trading within a narrow range to support exports and combat an economic slowdown.
The yuan’s exchange rate is not the cause of the U.S. trade deficit, Chinese Foreign Ministry Spokeswoman Jiang Yu said yesterday, after Barack Obama, the Democratic candidate for the U.S. presidency, urged China to change its currency policies. The Chinese currency fell versus the U.S. dollar in the previous two months after gaining each month since May 2006.
“The yuan will remain stable as policy makers are focusing on shoring up the economy and aiding exporters,” said Wen Li, a Beijing-based dealer at Bank of China Ltd., the country’s biggest foreign-currency trader. “The currency will stay mostly in the range between 6.82 and 6.85 through the rest of this year.”
The yuan rose 0.16 percent to 6.8375 versus the dollar as of 9:52 a.m. in Shanghai, from 6.8485 on Sept. 26, according to the China Foreign Exchange Trade System. The currency was little changed today and climbed 0.08 percent in the week.
“I hope the U.S. can expand its exports to China and reduce barriers to trade and investment. We believe this will help the U.S. reduce its trade deficit,” Jiang told reporters yesterday at a weekly briefing in Beijing.
Obama called on China to rely less on exports, linking its trade surplus with “manipulation” of the yuan’s value, according to a letter dated Oct. 24 released by a U.S. textile industry group.
China, the world’s second-biggest goods exporter, saw its trade surplus drop 3 percent to $180 billion in the first nine months as shipments to the U.S. and Europe cooled. The central bank lowered interest rates for the third time in two months on Oct. 29 after a government report showed the economy grew 9 percent in the third quarter, the slowest pace in five years.
Tags: central-bank, exports, investment