China Yuan Has Best Week in Two Months; Bonds Little Changed

[Enivid]

The yuan had its biggest weekly gain in more than two months on speculation Federal Reserve purchases of Treasuries will boost the supply of dollars, weakening the greenback. Bonds were little changed.

The yuan strengthened for a fourth day against the U.S. currency, which was headed for a record weekly drop against the euro. China has allowed the yuan to weaken 0.07 percent this year as the country’s overseas sales slumped in the first two months amid a global recession.

“The dollar’s plunge is pushing the yuan slightly higher,” said Hua Wei, a foreign-exchange trader at Shenzhen Development Bank Co. in Shenzhen. “Traders are cautious about this rally because the government won’t allow quick appreciation as exporters are still suffering.”

The currency traded at 6.8277 per dollar as of 5:30 p.m. in Shanghai, compared with 6.8285 late yesterday, according to the China Foreign Exchange Trade System. It gained 0.15 percent this week and earlier touched 6.8264, the strongest since Jan. 5. ICE’s Dollar Index, which tracks the greenback against the currencies of six trading partners, slid 5 percent this week.

From Bloomberg News.

 

[andy003]

China’s economy is in goof position than predictable, the Country’s Premier said, but in Japan a huge fall in wholesale prices showed the world’s second-largest economy was down back towards deflation.

Last month a jump in china’s industrial production, with a record climb in new lending, gave additional credibility to the plan that the bottom of the worst global financial crisis as the Great Depression may not be distant.
On Saturday, Premier Wen Jiabao told to the reporters in Thailand, that China’s economy had shown some latest signs, but we all know that our financial system still facing big difficulties.

The China Securities Journal reported on Monday that china was planning a new economic stimulus package targeted to increasing consumption, citing a senior officer of the State Information Center which is associated with the top planning agency of the country. The economic positions in Japan remain doubtful while in China things were looking intense.

 

[Pinalli]

Looking at the Asian Impact of this crisis, China one of the biggest and powerful nation of Asia, is expecting to see the slowest growth rate in 10 years due to the global recession and also expecting diminishing demand following to the export sector to collapse. As we all know that China is an export oriented nation, with this collapse of its main driver of economic growth it is definite to watch incredible slowdown in the near future.

I have read in many forex online market reviews that they forecasts to see a growth rate near 6% in the first quarter. Although this level has never being witnessed in a decade but I think China should be happy about it that at least this nation is experiencing growth rather than retrenchment.