Yuan Little Changed as China Seeks to Avert Economic Slowdown
China’s yuan was little changed against the dollar on speculation policy makers are keeping the currency trading within a narrow range to aid exporters as recessions take hold in the U.S., Europe and Japan.
Waning overseas demand has “adversely affected” industrial production and company earnings, President Hu Jintao said Nov. 21 at the Asia-Pacific Economic Cooperation summit in Lima, Peru. The yuan’s reference rate, fixed daily by the People’s Bank of China to guide the market, has fluctuated no more than 0.04 percent each day this month.
“The reference rates give the most obvious evidence that the government wants to keep the yuan at around 6.83,” said Li Tao, a foreign-exchange trader at Shenzhen Development Bank Co. in Shenzhen. “A stable currency would help to pull China out of the economic downturn and retain investors’ confidence.”
The yuan traded at 6.8300 per dollar as of 12:24 p.m. in Shanghai, compared with 6.8311 late on Nov. 21, according to the China Foreign Exchange Trade System. The currency is allowed to trade by up to 0.5 percent against the dollar either side of the so-called central parity rate, which was set at 6.8304 today.
China’s gross domestic product grew 9 percent in the third quarter from a year earlier, the slowest rate in five years, and the government this month announced a 4 trillion yuan ($586 billion) stimulus plan to spur the economy as exports slump.
Government Bonds
Government bonds were little changed after central bank Deputy Governor Yi Gang said interest rates are at a “relatively appropriate” level.
The yield on the 3.69 percent note due September 2013 was 2.55 percent, according to the China Interbank Bond Market. The price stood at 105.12.
“The bond market is quiet because there is no good news,” said Mo Fan, an analyst at Soochow Asset Management Co. in Shanghai. “There was no government announcement to cut interest rates over the weekend, as expected by traders.”
The central bank will monitor changes in the nation’s economic situation to determine monetary policy and will use a combination of tools to achieve the best result, Yi said in an interview broadcast yesterday by Hong Kong;s Phoenix Television. The central bank cut interest rates three times since the start of September to support the economy.
Tags: central-bank, economic