Forex News

Live Forex news from all over the world.


Chinese Yuan Tries to Recover After Drop in Exports, PBoC Stimulus

June 9, 2020 at 16:14 by Andrew Moran

Chinese 100-yuan notesThe Chinese yuan is falling against a myriad of currency competitors on Tuesday as it attempts to recover after a decline in exports. The yuan has stabilized in recent weeks due to the world’s second-largest economy hitting the reset button, but the currency is still above the seven-threshold against the US dollar and other major rivals.

According to the General Administration of Customs, exports slumped at an annualized rate of 3.3% to $206.81 billion in May, following a 3.5% jump in April. The reading was better than the market forecast of -7% as the coronavirus pandemic decimated business activity and global trade. Imports to China plummeted 16.7% year-over-year to $143.89 billion last month, down from a 14.2% decline in April. Analysts had anticipated a 9.7% drop.

Overall, China’s trade balance increased from $45.33 billion to $62.93 billion.

The People’s Bank of China (PBoC) reported that foreign exchange reserves surprisingly climbed $10.23 billion to $3.102 trillion in May. This is the biggest increase in three months. The central bank’s gold reserves surged to $108.29 billion last month.

Investors will look to inflation, automobile sales, and loan data.

new Reuters poll of economists suggests Chinese banks will have doled out $211.84 billion in new net loans last month, down $3 billion from the previous month. But this would be higher than the $150 billion in new loans from the same time a year ago. They also see the M2 money supply growth coming in at 11.3%, compared to 11.1% in April.

Meanwhile, on the monetary front, the PBoC injected $21.1 billion into the banking system on Friday through its seven-day reverse repurchase agreements. It left interest rates unchanged at 2.2%. Officials note that the purpose was to respond to maturing reverse repos and banks’ reserve requirement payments. The central bank also wants to ensure there is sufficient liquidity levels in the financial system are “reasonably ample.”

The USD/CNY currency pair rose 0.08% to 7.0773, from an opening of 7.0714, at 16:03 GMT on Tuesday. The EUR/CNY advanced 0.58% to 8.0331, from an opening of 7.9862.

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

Leave a Reply