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Chinese Yuan Dips As Exports Fall Short of Estimates

December 9, 2019 at 19:01 by Andrew Moran

Chinese yuan denominationsThe Chinese yuan is trading slightly lower against multiple currencies to kick off the trading week. The yuan’s performance on Monday was driven by the latest disappointing trade numbers that suggest Beijing is still reeling from the US-China trade dispute. This might explain why, according to Chinese government officials, the world’s second-largest economy wants to settle phase one of a deal.

China’s trade surplus tumbled to $38.73 billion in November from the same time a year ago, which represents the smallest surplus since August. The market had expected a trade balance of $46.3 billion.

The General Administration of Customs data showed that exports fell for the fourth consecutive month by 1.1% year-on-year to $221.74 billion last month, falling short of 1% growth estimates. Imports to China surprised investors as they rose for the first time since April by 0.3% to $183.01 billion in November, beating forecasts of a 1.8% decline.

According to the People’s Bank of China (PBoC), foreign exchange reserves decreased from $3.105 trillion in October to $3.096 trillion in November. Analysts had anticipated reserves to drop slightly to $3.103 trillion.

Markets will now look ahead to inflation and vehicle sales data.

Can China rebound in 2020? Zhu Haibin, JPMorgan’s Chief China Economist, thinks it can. In a new research note, Zhu notes that various key economic barometers are expected to improve in the first half of next year due to infrastructure and manufacturing investment by the government.

On Sunday, the deadline to hike US tariffs on $160 billion in Chinese goods expires. It is unclear if the two sides can settle the first phase by then. Beijing has said that it wants both sides to roll back levies before moving on from phase one, while Washington has dismissed the demands. But a deputy commerce minister told the press that China wants to settle the trade war with “satisfactory results as soon as possible.”

The USD/CNY currency pair rose 0.06% to 7.0393, from an opening of 7.0353, at 17:55 GMT on Monday. The EUR/CNY edged up 0.09% to 7.7864, from an opening of 7.7786.

If you have any questions, comments, or opinions regarding the Chinese Yuan, feel free to post them using the commentary form below.

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