Yuan, Bonds Little Changed; China Hints at No Yuan Depreciation
The yuan was little changed against the dollar as China signaled that it won’t seek a weaker currency to boost exports as the global financial crisis slashed demand for Chinese products. Bonds were little changed.
China won’t depreciate the yuan to spur exports, the Communist Party newspaper People’s Daily reported today, citing Commerce Minister Chen Deming. The central bank fixed the reference rate at 6.8397 per dollar, little changed from 6.8357 two months ago, indicating its preference for a stable exchange rate.
“Currency weakness won’t be quite helpful to stem the slide in overseas shipments,” said Li Tao, a foreign-exchange trader at Shenzhen Development Bank Co. in Shenzhen. But “we certainly won’t see any more appreciation because it would be harder for exporters to survive.”
The yuan traded at 6.8495 per dollar as of 2:54 p.m. in Shanghai, from 6.8485 yesterday, according to the China Foreign Exchange Trade System. The Chinese currency has advanced 6.6 percent this year, less than the total gain of 6.9 percent in 2007.
The impact of currency depreciation would be “very limited” in boosting overseas sales amid faltering global demand, Deming said in an interview with the Chinese-language newspaper. He made similar comments on Dec. 4 during U.S. Treasury Secretary Henry Paulson’s visit to Beijing.
Some countries have had a huge devaluation in their currencies, but still aren’t able to ease a slowdown in exports, the minister was quoted as saying.
Bonds Little Changed
South Korea’s exports fell by the most since December 2001 in November even though the won slid 28 percent this year, making it the worst performer among the 10 most-active currencies in Asia outside Japan.
China’s exports declined 2.2 percent in November from a year earlier after gaining 19.2 percent in October, the customs bureau said on Dec. 10. That’s the first decline in seven years.
Government bonds were little changed before year-end. China’s fixed-income securities returned 11.3 percent this year, Asia’s second-best performing market after India, according to local-currency debt indexes compiled by HSBC Holdings Plc.
The yield on the 4.5 percent note due May 2038 was unchanged 3.58 percent, the lowest since Oct. 13, according to the China Interbank Bond Market. The price was 116.63.
“Trading is light as the year-end holidays near,” said Nie Shuguang, a debt trader at Industrial Bank Co. in Shanghai.
Tags: Bond, central-bank, exports