The Chinese yuan is gaining against its American counterpart midweek, despite a myriad of disappointing economic numbers that show the national economy is not on strong footing. It is evident by now that Beijing will be unable to weather the storm clouds forming from the US-China trade war.
According to the National Bureau of Statistics (NBS), consumer spending on automobiles and staple foods expanded 8.6%, the slowest pace in five months in October. NBS data also found that property sales growth advanced 9% to record their slowest pace since March. Beijing believes that consumers will spend again because of the across-the-board Tax Cuts instituted by the federal government at the end of October.
Central Bank officials reported that the number of new bank loans declined last month, despite the People’s Bank of China (PBOC) slashing the reserve requirement ratio by 1%, which unleashed about $110 billion in extra cash to allow financial institutions to lend to factories and construction projects.
Ministry of Finance numbers found that the government’s fiscal revenues dropped 3.1% last month compared to the same time a year ago. This comes as the government’s infrastructure spending on roads and buildings rose 5.7% in the first 10 months of 2018.
Experts agree that one of the only positives in Wednesday’s figures was the 5.9% increase in industrial output, which was up 0.1% from the previous month.
Investor optimism over the US-China trade dispute coming to an end has diminished. Right now, it appears unlikely that Washington and Beijing will reach a conclusion before the end of 2018. Officials suggest that a trade deal could happen in the new year, but traders maintain the mantra of we will believe it when we see it.
Until then, the federal government will continue to stimulate the economy through infrastructure investments, tax cuts, and accommodative monetary policy. Whether the yuan will endure its freefall beyond a 10-year low remains to be seen.
The USD/CNY currency pair slumped 0.08% to 6.9505, from an opening of 6.9561, at 16:41 GMT on Wednesday. The EUR/CNY dipped 0.06% to 7.8454, from an opening of 7.8503.
© AndrewMoran for Forex News, 2018. |
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Post tags: China Yuan, EUR/CNY, Industrial Production, National Bureau of Statistics of China, People's Bank of China (PBOC), Retail Sales, USD/CNY
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