Surging (Trade), Strengthening (RMB), Cooling (Stocks)

Related entries: Economy, General, Investment, News, Trading

The lastest economic news includes a hefty trade surplus (with a one-off spike?), a strong RMB (or just a weaker US dollar?), and some pressure coming off the stock market:

    Trade Surplus: This reached a record US$26.9 billion in June (according to the FT and Reuters), partly due to a surge in exports before cuts to export tax rebates came in on 1 July. “The overall surplus for the first six months came to $112.5bn, the Customs Administration said on its website, 83 per cent more than in the same period last year. The rolling 12-month surplus reached $229.2bn, up from $216.6bn in May.” Where will it go in July?

    • RMB: The Chinese media (People’s Daily) has pointed out that the RMB is at a record high against the US dollar, in the hope that this will balance the news about the trade surplus. But there is not much chance of that! “The value of the yuan went up 240 basis points from Monday”s 7.6085 against the U.S. dollar to open for trade on Tuesday at 7.5845, the highest rate since the yuan was revalued by 2.1 percent from 8.28 yuan in July 2005.”

    Stock Market: The FT reports falls on the Chinese market, which was down 5.25 percent last Thursday, and 12 percent over a two-week period. “The share price decline and more modest trading are a further indication that the authorities have managed to take the steam out of the stock market without causing a dramatic correction.” Interestingly it seems that use of the market forces of supply (more big IPOs) and demand (new retail accounts are slowing) has been the government’s most effective weapon so far.

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