Asia, China developments and G20 – BTMU
FXStreet (Guatemala) – Lee Hardman, analysts at the Bank of Tokyo-Mitsubishi UFJ, Ltd, noted the sell-off in Asian currencies accelerated overnight following the re-opening of the Chinese markets after the holiday from late last week.
Key Quotes:
“The PBoC set the daily fix for USD/CNY marginally lower at 6.3584. The offshore USD/CNH has declined marginally as well although the offshore USD/CNY has traded modestly higher.
The worst performing Asian currencies overnight have been the Malaysian ringgit and the South Korean won with USD/KRW rising above the 1200-level for the first time since October 2011.
PBoC Governor Zhou Xiaochuan has attempted to provide further reassurance to investors that the worst of the volatility in the renminbi and domestic equity market is over. In a statement released over the weekend, Governor Zhou stated that the recent correction lower in domestic equities is “pretty close to the end” after the bubble burst and that the renminbi is close to stabilizing with no basis for long-term depreciation.
The comments follow on from more in depth discussions between policymakers about recent developments in China at the G20 meeting. Following the talks, China joined a pledge by all G20 members to “refrain from competitive devaluations”, although it was not directly mentioned by name in the statement. It was the first time the G20 has used such language since 2013. Chinese finance minister Lou Jiwei reportedly told the meeting that he expects the Chinese economy to expand by about 7% for the next four to five years. The National Bureau of Statistics also announced over the weekend that they have revised marginally lower real GDP growth recorded last year by 0.1 percentage point to 7.3% driven by lower output in the service sector while industrial and agricultural output were both revised higher.”
Lee Hardman, analysts at the Bank of Tokyo-Mitsubishi UFJ, Ltd, noted the sell-off in Asian currencies accelerated overnight following the re-opening of the Chinese markets after the holiday from late last week.
(Market News Provided by FXstreet)