Yuan falls on talks rises being stemmed
The yuan fell, eroding the bulk of this month’s advance against the United States dollar, on speculation that China is stemming gains to counter the impact of a global economic slump on exports. A rally in government bonds paused.
The Chinese currency has strengthened less than 0.1 percent this month after policy makers pledged to focus on exchange-rate stability. Chinese exports to Russia slumped for the first time since 2000 in the third quarter, Vedomosti, a Russian business daily, reported on Thursday, citing Russia’s Trade Representative in China Sergei Tsyplakov.
“The government has to advocate a stable yuan as it’s facing a dilemma,” said Yang Lindong, a foreign-exchange trader at Shenzhen Development Bank Co in Shenzhen. “Appreciation will hurt exporters more but depreciation will prompt speculative capital to flee the country.”
The yuan fell 0.12 percent to 6.8433 per US dollar in Shanghai as of the 5:30pm close, according to the China Foreign Exchange Trade System. It was 6.8485 at the end of September.
Russian imports from China fell 5.1 percent in the third quarter, Tsyplakov said in the Vedomosti report. Imports of clothes and textiles fell the most, the newspaper said.
The People’s Bank of China fixed the reference rate for yuan trading at 6.8357 per dollar yesterday, little changed from 6.8311 on October 17 and 6.8327 on October 10, signaling it wants to keep the exchange rate stable. The yuan, managed against a basket of currencies, is allowed to trade by up to 0.5 percent against the US dollar either side of the so-called central parity rate, according to Bloomberg News.
Government bonds due in seven years and more changed little this week, ending a two-week rally on speculation of their rapid advance.
Bonds due in less than three years increased gains this week to match the falls in the yield on short-term central bank bills, said He Xin, a fixed-income analyst at China Jianyin Investment Securities Co.
China’s bonds have increased 2 percent in total since the central bank reduced interest rates on October 8, according to an Asian local-currency debt index.
Tags: central-bank, economic, exports, Peoples-Bank-of-China