Yuan fall not ending soon, analysts say
REUTERS, THE NATION

BANGKOK: -- AFTER Tuesday's devaluation, the Chinese currency could be heading for an overall decline of almost 10 per cent because of the pressure from government circles, said a Reuters report quoting sources involved in the policy-making process.

"There have been internal calls for the exchange rate to be more flexible, or depreciated appropriately, to help stabilise external demand and growth," said a senior economist at a government think-tank that advises policy-makers in Beijing.

"I think yuan deprecation within 10 per cent will be manageable. There should be enough depreciation, otherwise it won't be able to stimulate exports."

If that were the case, impacts on global stock and currency markets would continue.

The Chinese spot rate for the yuan hit 6.45 per US dollar yesterday, its weakest since August 2011. In two days, it has fallen almost 4 per cent. The central bank yesterday set its daily mid-point reference at 6.3306, even weaker than after Tuesday's devaluation.

The Stock Exchange of Thailand was closed yesterday for a national holiday, but other global markets extended their decline. Investors sought refuge in top-rated German and US bonds.

Exporting countries whose products are similar to China's witnessed a fall in their exchange rates against the dollar. Touching 35.53 on Tuesday, the baht yesterday regained some of its loss, hitting 35.34 at 5pm. Regional currencies including the Singapore dollar, Malaysian ringgit and Indonesian rupiah slid further.

Singapore's United Overseas Bank expects the yuan to weaken further to 6.53 in the second quarter of 2016. UOB economist Suan Teck Kin also warned against more two-way volatility for the currency as investors are increasingly uncertain of its next moves.

The People's Bank of China had been keeping the yuan strong to support the ruling Communist Party's goal of shifting the economy's main engine from exports to domestic demand. Until the devaluation, the currency had appreciated overall by 14 per cent over the past 12 months on a trade-weighted basis, according to data from the Bank for International Settlements.

The depreciation sparked fears of a global currency war and accusations that Beijing was giving an unfair advantage to its struggling exporters. But Standard & Poor's chief economist for the Asia-Pacific region, Paul Gruenwald, said the authorities used weak export data to depreciate the currency, which is more likely aimed at responding to requests by the International Monetary Fund and the United States.

"We see the timing as opportune. This is because China can now say that by moving to a more market-determined rate it is delivering what the IMF and US Treasury have been asking for. And since the pressure is now on the yuan to weaken, having more exchange-rate flexibility is palatable to the Chinese authorities," Gruenwald said.

Source: http://www.nationmultimedia.com/business/Yuan-fall-not-ending-soon-analysts-say-30266473.html


-- The Nation 2015-08-13

Good.

Keep the Chinkies and Ruskies out.

TAT : No effect on Thailand ... Solid as rock of Gibraltar ... Smooth as silk ... Land of Smiles ... Tourists flocking to Thailand ...

and the lies just continues ...