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Chinese Yuan – Currency News
The implied probability of a further hike in US interest rates this year declined on Friday to 35%, down from probabilities above 40% one day earlier. This fairly drastic adjustment in market expectations for US rates occurred following inflation data which, remarkably, came in below market expectations for the fifth consecutive month. The US dollar ended the week lower as a result. View article >
Tuesday’s Asian session was stirred by a surprise surge in the Chinese yuan.
Starting around 9:30am in Beijing, the yuan began rallying strongly against the dollar, with offshore rates declining (the yuan strengthening) to 6.7024 by 1pm, from rates earlier in the session around 6.73. Onshore yuan easily broke the 6.7 level and as of writing is holding steady in the mid-6.69s – a 10-month high in the yuan’s buying power. View article >
The IMF said on Friday that the current valuations of the Chinese yuan and Japanese yen are broadly consistent with fundamentals.
In its latest External Sector Report – a yearly assessment of currency valuations as they relate to each country’s current account balance, external balance sheet, capital flows and reserves – the IMF said that “despite moving closer to the level consistent with overall assessment, renminbi remained broadly in line with fundamentals and desirable policies.”
Furthermore, despite declines in China’s foreign exchange reserves over the past two-years, current levels remain acceptable. View article >
China released a series of better-than expected economic reports that were viewed with a jaundiced eye by traders. China Q2 GDP rose to 6.9 % a tick higher than the 6.8% that was expected. Industrial Production was a robust 7.6%, well-above the 8.5% that was forecast.
However, the quality of the data is questionable as it is coming just before a possible leadership shuffle at the Communist Party Congress, in the fall, a meeting that occurs only once every 5 years. View article >
China’s yuan was Asia’s best performing currency in May. Offshore yuan, which is traded in international financial centres like Hong Kong, Singapore and London, rose 2.3% against the US dollar during the month. And yesterday, the first trading day in June, the yuan rallied again, making further gains of 0.3% and forcing the dollar-to-yuan exchange rate (USD/CNH) down as low as 6.72 – the yuan’s strongest valuation in seven months. View article >
The Australian dollar has fallen this morning following a downgrade of China’s debt rating by US ratings agency Moody’s.
The giant Asian nation has been assigned a new rating of A1 (from Aa3) by the agency on the grounds that its “financial strength will erode somewhat over the coming years.” It is the first time in nearly three decades that Moody’s has cut China’s sovereign rating. View article >
The New Zealand dollar has fallen more than a cent against the US dollar following this morning’s RBNZ statement.
As expected by the market, New Zealand’s official cash rate was kept at its record low of 1.75%, but the dovish tone of the RBNZ’s accompanying statements has surprised many.
“Monetary policy will remain accommodative for a considerable period,” said RBNZ Governor Graham Wheeler. View article >
On Friday, Scotiabank – otherwise known as the Bank of Nova Scotia – outlined four factors that would drive Asian currencies higher in 2017.
Investors would “pour funds” into Asian markets on the following grounds:
1) If the Bank of Japan and European Central Bank continue with their stimulus programs, providing “accommodative” levels of liquidity to the economy.
With three consecutive months of positive core inflation in Japan, it is unlikely that the BoJ will be ending stimulus any time soon. View article >
The Malaysian ringgit has been one of Asia’s worst performing currencies for some time.
Between May-2013 and September-2015 the exchange rate for MYR/USD declined from highs at 0.338 to 0.223 – a 34% fall in the currency’s value.
Markets gave the ringgit some respite between October-15 and April-16, a period in which the ringgit clawed back around half of the aforementioned losses, but then selling against the US dollar began again, which accelerated following the result of November’s US election. View article >
The US dollar has started the week lower against most currencies as traders play catch up following market holidays on Friday.
In Friday’s market update
at BestExchangeRates.com, we described how March’s US core inflation fell month-on-month for the first time in seven years, but with many investors away for the Good Friday holiday, we also described how expected weakness in the US dollar did not occur (the US Dollar Index actually finished higher on the day). View article >