In Japan, the Nikkei ended the day down 0.5% as Bank of Japan governor Haruhiko Kuroda reiterated that the country’s price trend was improving steadily reflecting a moderate economic recovery, and that he had no plan to expand monetary stimulus now.
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The dollar isn’t the only currency lifted by the Chinese trade data.
Chinese banks traditionally front-load their lending in the first half of the year after being granted new loan quotas, and then extend proportionally less credit into the year-end.
The prospect that liquidity could be drying up raised concerns among already-nervous investors about the outlook for the market, despite a rebound the previous day.
“There will be some front-loading of shipments before the Chinese New Year, but that boost could fizzle again quickly thereafter”, said Frederic Neumann, co-head of Asian economic research at HSBC Holdings Plc in Hong Kong. “The news is very confusing”. The yuan HIBOR fell to 8.31 percent yesterday. It has fallen 0.5% in two days, its biggest two-day fall since 1986. On Wednesday, China’s share markets appeared to take no comfort from December trade data that beat forecasts and tempered some of the fears about the slowdown in the world’s second-largest economy.
Both the major stock indexes shed more than 3 per cent, raising questions about Beijing’s ability to stop a sell-off that has now reached 18 per cent since the beginning of the year.
An investor checks stock information on a mobile device at a brokerage house in Shanghai, China, January 8, 2016.
OIL PRICES: Crude oil prices tumbled overnight but bounced higher Wednesday in Asia. Energy sector in Hong Kong pulled the index down the most in today’s session.
SSEC’s 2,900 points is “a fair trading value” around which the Shanghai market will likely fluctuate with a 400-point range in either directions, according to Hong Hao, managing director at BOCOM International.
Yuan-denominated deposits at China’s banks increased 14.97 trillion yuan in 2015, 1.94 trillion yuan more than the previous year.
Traders said the offshore yuan probably weakened because of strong dollar demand, and the expectation that the yuan would weaken further.
Trading was calm in the morning, amid signs that the yuan was stabilising after intervention by China’s central bank.
CURRENCIES: The euro rose to $1.0890 from $1.0859, while the dollar fell to 117.60 yen from 118.20 yen. The panic seen in financial markets last week has receded since Chinese policy makers intervened to halt the yuan’s drop to a five-year low, reducing the risk of a currency war.
The Indonesian rupiah USDIDR, +0.62% strengthened 0.1% to 13,895 to one USA dollar.
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“The key for the spot rate’s move is the central bank’s attitude”, said a dealer at an Asian bank in Shanghai.
