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MNI: A Sharply Weaker Yuan Looms As A Threat To China's Trade

MNI (Singapore)
(MNI) Beijing

A weaker yuan raises costs in the closely linked import and export industries, making hedging vital as advisers and analysts warn of more volatility.

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China’s closely linked import and export industries confront higher raw material costs as the yuan continues to fall despite efforts by the central bank to slow its slide, highlighting the need for exporters to prepare for more two-way volatility, policy advisers and analysts told MNI.

The weakness in the yuan against the U.S. dollar - it fell to a near 15-year low of 7.32 on Nov 1 - risks reverberating through Chinese industry by raising the cost of imports like commodities, which then would have a knock-on effect on exporters who require these raw materials, or components made from these products, in their own production processes.

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China’s closely linked import and export industries confront higher raw material costs as the yuan continues to fall despite efforts by the central bank to slow its slide, highlighting the need for exporters to prepare for more two-way volatility, policy advisers and analysts told MNI.

The weakness in the yuan against the U.S. dollar - it fell to a near 15-year low of 7.32 on Nov 1 - risks reverberating through Chinese industry by raising the cost of imports like commodities, which then would have a knock-on effect on exporters who require these raw materials, or components made from these products, in their own production processes.

Keep reading...Show less