MARCH 14TH 2016
RENMINBI STRIKES BACK: CHINESE CURRENCY SHOWS POSITIVE RESPONSE TO POLICY EFFORTS
China’s Yuan policies seem to be fruitful as the currency reaches to its highest point next to the dollar. In less than a month, the Chinese government has managed to collect gains for its currency in the domestic market, and score high ever since last December.
Positive movement was sustained throughout the country’s top annual political meetings: The National People’s Congress and the Chinese People’s Political Consultative Conference. According to some reports, currency strengthening responds to a calculated effort of national authorities to show financial stability while all the attention was around these highly relevant political events.
Currency exchange was at 6.4943 Yuan per Dollar on Monday, showing a slight fall of the USD from last Friday’s, when it reached 6.4985 Yuan per Dollar.
The Yuan’s unexpected resilience is already taking some victims. Pessimistic speculators are taking the bullet for working on calculations at a lower rate. According to Bloomberg, at least $562 million have been lost as expectations of further devaluation have been turned around. It is expected that some $807 million could be lost within the next three months with similar moves.
Beijing is showing to be a tough adversary. According to Hilmi Unver, head at a Swiss money manager responsible for $3 billion invested on hedge funds on behalf of clients, China wants to have control over the Yuan at any cost.
State control over financial institutions is proving useful to manage calculated risks in the process of economic restructuring. A positive effort revaluating the Yuan could help to ease domestic constraints as massive layoffs are bound to happen soon. People in China have expressed their concerns about the increasing cost of life, which could provoke major social disruptions.
Sources:
http://www.marketwatch.com/story/chinas-yuan-policy-appears-to-be-paying-off-2016-03-13
http://www.scmp.com/business/global-economy/article/1924568/chinas-yuan-see-saws-against-us-dollar
http://www.wsj.com/articles/yuans-jump-is-sign-chinas-policy-succeeds-1457925578
Annex Asia Publishing
Image: doisongphapluat.com
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