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of intelligence and analysis on the Global Fixed Income, Foreign Exchange and Energy markets. We use an innovative combination of real-time analysis, deep fundamental research and journalism to provide unique and actionable insights for traders and investors. Our "All signal, no noise" approach drives an intelligence service that is succinct and timely, which is highly regarded by our time constrained client base.Our Head Office is in London with offices in Chicago, Washington and Beijing, as well as an on the ground presence in other major financial centres across the world.
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Free AccessMNI EUROPEAN MARKETS ANALYSIS: ECB Expected To Cut Rates Later
MNI EUROPEAN OPEN: A$ & Local Yields Surge Following Jobs Data
MNI INTERVIEW 2: Economic Woes Push Down Yuan as PBOC Looks On
--Yuan Drops on Stalling Growth, Dim Export Outlook: Zhang
--Weaker Yuan Seen by Policymakers Aiding Exports: Zhang
--Central Bank Likely Sees No Need to Intervene for Now: Zhang
--Adds To Zhang Interview Part 1 published Wednesday
BEIJING (MNI) - The recent slide in the Chinese currency yuan was mostly
due to weakening economic fundamentals and market sentiment, and the People's
Bank of China (PBOC) has seen no need to intervene, Zhang Ming, a senior fellow
at the Institute of World Economics and Politics under the Chinese Academy of
Social Sciences, told MNI.
"The central bank is taking advantage of the opportunity to let effective
exchange rate readjust and buffer against the impact on exports of the previous
sharp appreciation against the currencies basket," said Zhang, who stressed the
opinions are of his own and do not represent that of the PBOC.
"Plus, it helps cushion the exports as its outlook has really been gloomy
due to the Sino-U.S. trade spat," he added.
The yuan has fallen against the dollar in the past nine trading days,
dropping 3.64% and giving back all of the year-to-date gains. Thursday's USDCNY
close of 6.6250 was the highest since Nov 2017.
"Since depreciation can boost exports and economic growth and it is
partially generated by the escalating trade conflicts, a proper drop of the yuan
against the dollar is beneficial," Zhang said. Policymakers should keep policy
continuity and under current circumstances, refrain from regulatory intervention
in the forex market.
--ECONOMIC DIFFERENTIATION
The differentiation in the China-U.S. economic scenario and monetary policy
stances has contributed to the yuan's depreciation, Zhang said.
Several recent economic indicators signaled a downturn, as consumption,
investment and exports have all been below market expectation.
"The slip of infrastructure investment and uncertainty in exports are the
main reasons for the economic slowdown, particularly when the local government
debt-raising has been curbed and a China-U.S. trade war is looming," Zhang
warned, noting "the American economy is in a track of rising faster than its
potential growth."
Additionally, Zhang said loosening operations by the PBOC also pressured
the yuan, as the yield differential between China and U.S continues to narrow,
Zhang said.
--MNI Beijing Bureau; +86 10 8532 5998; email: william.bi@mni-news.com
--MNI Beijing Bureau; +86 (10) 8532 5998; email: marissa.wang@marketnews.com
[TOPICS: MMQPB$,M$A$$$,M$Q$$$]
To read the full story
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Why MNI
MNI is the leading provider
of intelligence and analysis on the Global Fixed Income, Foreign Exchange and Energy markets. We use an innovative combination of real-time analysis, deep fundamental research and journalism to provide unique and actionable insights for traders and investors. Our "All signal, no noise" approach drives an intelligence service that is succinct and timely, which is highly regarded by our time constrained client base.Our Head Office is in London with offices in Chicago, Washington and Beijing, as well as an on the ground presence in other major financial centres across the world.