Yuan seen to remain stable in long term
April 14, 2009
THE yuan may appreciate against the United States dollar over the short term but is more likely to remain stable in the long run, analysts said.
The Chinese currency dipped slightly against the greenback last week and ended at 6.8347 last Friday, according to the China Foreign Exchange Trade System. The yuan closed at 6.8320 by the end of the previous week.
The State Council, China’s Cabinet, last Wednesday picked Shanghai and four other cities in Guangdong Province to take part in a trial to settle overseas trade in the yuan rather than US dollars in a move to stabilize the trade and to build up the yuan’s position in the international monetary system.
“The trial settlement in yuan would favor the local currency and boost its appreciation in the short and middle terms,” according to a research note by Standard Charted.
Deng Xianhong, deputy head of the State Foreign Exchange Administration, last Friday said China “will move on with the trial of using yuan in overseas trade settlement and relax the cross-border financing restrictions to shore up support from foreign exchange to the economy.”
China’s exports last month fell by a slower pace of 17.1 percent from a year earlier to US$90.29 billion, the General Administration of Customs said last Friday.
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RMB Trade Settlement Start in Five Cities
April 10, 2009
The State Council announced a pilot policy allowing cross-border trades in five cites to be settled in yuan, instead of foreign currencies as previously required, reported the Daily Sunshine The program will be implemented in Shanghai and four cities in Guangdong Province: Guangzhou, Shenzhen, Zhuhai and Dongguan.
Some observers have interpreted the government’s move as a response to a potential depreciation of the US dollar in the future. The Beijing News quoted Zhao Xijun, an economist from Renmin University, stating that with America increasing the monetary supply, its currency is facing downward pressure.
Also on the front page is the news about Larry Yung’s resignation from his position as chairman of the state-owned overseas investment company CITIC Pacific yesterday. The newspaper previously reported that Yung (荣智健) and other board members were investigated by Hong Kong’s Securities and Futures Commission in January.
Another widely-reported news item concerns a Ministry of Finance announcment that the government is planning to provide 850 billion yuan in three years to fund medical service reform package proposed by the State Council. 2/3 of the fund will be spent to cover the expenses of the patients and the rest would be used to improve the service quality of the the hospitals.
In non-financial news, seven suspects, including five former officials of the county government of Xishui, Guizhou Province, stood trial yesterday on charges of engaging in sex with minors. The news media previously reported the defendants paid the victims, who were under the age of consent, for sex. According to the article, a China Youth Daily reporter testified that sex trade involving underage girls is rampant in the province.
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Stable pledge for the yuan
February 9, 2009
THE yuan will remain stable against the United States dollar in the near future with the Chinese government pledging to stabilize the currency.
The yuan closed slightly higher against the dollar last week at 6.8371 on Friday, according to the China Foreign Exchange Trade System. The local currency ended at 6.8380 by the end of the previous week.
“The yuan will not gain or fall on a large scale. The financial turmoil has brought much uncertainty to the market, and we will keep it at a reasonable and stable level,” said Zhou Xiaochuan, governor of the central bank.
“China’s exports are heavily affected by falling demand from foreign countries, and a depreciation of the local currency will not be any good for domestic manufacturers,” said Lian Ping, chief economist with the Bank of Communications.
Liu Dongliang, an analyst with China Merchants Bank, said: “We have seen a fairly balanced trading of the yuan after the week-long Chinese New Year holiday.”
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Will Yuan Depreciate against USD?
December 19, 2008
As the Chinese currency yuan or renminbi appreciated all over 2 years and those buying from China directly felt the rising costs of purchases since the stronger Yuan made the Chinese exports more expensive.
Nearly, for the last 6 months, the currency rate is stabilized at 6.80’s level. However, as the global crisis hit the Chinese economy, there is now the possibility for Yuan’s depreciation. But it is actually very hard because as the rest of the world have deep problems, a China making exports cheaper could or would give way to protectionist reactions against Chinese imports, especially in USA and EU.
Here is Shanghai Daily news about the debate over the depreciation:
ECONOMISTS are divided on the yuan’s movement next year.
Liao Qun, CITIC Ka Wah Bank chief economist, said yesterday he expects the yuan to appreciate 2 percent to 4 percent next year, a “moderate appreciation.” “From a mid and long-term view, the trend of yuan appreciation is irreversible as China continues to integrate with the global economy,” Liao said.
The currency has appreciated 6 percent this year against the United States dollar in the first half with its momentum on hold in the second half after a moderate depreciation in recent weeks.
The People’s Bank of China has said that it will stabilize the local currency and doesn’t rule out depreciation of the yuan.
Liao said he expected the foreign currency to re-emerge as a hot issue when President-elect Barack Obama takes office in January.
“A weaker yuan can help Chinese exporters. However, the question is that when the external demand is shrinking, a relatively cheaper price won’t make big difference,” Liao said. “Only if the yuan depreciated by 20 percent, which is unlikely, can there be a big help for exports. If not, a mild depreciation of the yuan won’t give actual significant help to exporters.”
Lu Zhengwei, Industrial Bank chief economist, had a different view and said depreciation of 10 percent next year would help exports.
“It may be the best timing for the yuan to depreciate since 2002 against the backdrop of the current financial crisis,” said Lu. “Why should China continue to keep its currency up when currencies of other emerging markets are depreciating?”
A depreciated yuan, together with tax rebates, would help exports a lot, he said. “Depreciation is part of a more flexible foreign currency control,” Lu said.
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Yuan set to climb against US dollar this week
December 15, 2008
Chinese currency yuan or renminbi was pegged to USD until 2005. Since then, the currency is allowed to appreciate unfavorably to those importing from China and to factories in China making exports because it makes the Chinese exports expensive as USD lose its previous value. So, for those importing from China is better to closely follow the currency movements as it directly affects the purchasing costs. Here is the latest situation of renminbi as of 14th Dec:
THE yuan is likely to continue its appreciation against the United States dollar this week.
The Chinese currency edged up to finish at 6.8451 against the US dollar last Friday, according to the China Foreign Exchange Trade System. The yuan closed at 6.8482 by the end of the previous week.
Fan Gang, a central bank monetary policy committee member, noted the modest depreciation of the yuan in the previous week was normal amid short-term volatility, according to a report by Shanghai Securities News.
Meanwhile, the US last Friday said retail sales in the nation fell 1.8 percent last month for a fifth consecutive month amid weak consumer sentiment and tight credit in a deepening recession.
Source: Shanghai Daily
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