The People’s Bank of China injected 1.53 trillion yuan in liquidity via its standing lending facility (SLF), medium-term lending facility (MLF) and pledged supplementary lending (PSL) ahead of the long holiday to avert any risks of a cash crunch.
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“Despite its recent volatility, the yuan is expected to remain stable in general in the near term”, said a dealer at a local commercial bank.
China’s banks normally start the year with a bang, extending loans to their best corporate customers, Orlik said. “New yuan loans exhibit a strong seasonality and usually peak in January”. In a rare interview with China’s Caixin magazine, Zhou dismissed speculation about further sharp falls in the value of the yuan this year.
China’s exports dropped 6.6 per cent year on year to 1.14 trillion yuan ($175 billion) in January while imports declined 14.4 per cent to 737.5 billion yuan, customs data showed on Monday.
In January, export figures of China dropped along with the imports.
Though the gains follow a strong showing last Friday, few market watchers are willing to say that there’s an underlying improvement in sentiment following weeks of turmoil that have sent many stock indexes into bear market territory.
BEIJING, Feb. 13 (Xinhua) – Analysts said prolonged low interest rates in the West and weak crude oil prices, rather than concerns over the Chinese economy, were the main cause of stock market fluctuations across the globe this week. The Chinese economy grew 6.9% in 2015 the slowest rate since 1990 and capital has been flowing out of the country due to worries over flagging growth, causing the currency to weaken.
Against the greenback, the yuan, also known as the renminbi, was trading at 6.5169 per dollar around 2200 GMT (6am Malaysian time), up from 6.4962 on Monday.
“We believe it most likely that outflows will ease over coming months as the economic collapse many are expecting doesn’t happen, as expectations of major depreciation fade, and as firms finish reducing their level of foreign currency debt”.
PBOC data also showed that yuan-denominated cross-border trade settlement reached 564.3 billion yuan last month.
The figures were far worse than expected, with economists forecasting a 1.8 percent fall in exports in a Bloomberg News survey, and a 3.6 percent slide in imports.
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In mid-August China adjusted the yuan down almost five percent over a week, spurring fears it was pursuing a currency war to help boost its flagging exports. Colombia’s peso should trade between 3,500 and 4,000 per USA dollar over the following quarters, compared to about 3,400 now, strategist Mario Castro at Nomura Securities said in a client note.
