MARKET REPORT: CHINA: Currency weakened against the U.S. dollar Friday to a six-year low, with the dollar riding a Donald Trump rally alongside upbeat economic data, while experts believe there is no basis for persistent depreciation of the yuan – @AceFinanceNews

#AceFinanceNews – Nov.11: Economic Watch: Yuan slumps to six-year low against greenback – Xinhua | English.news.cn
// 新华网_让新闻离你更近

The central parity rate of the renminbi lost 230 basis points, falling to 6.8115 against the dollar Friday, breaking the psychologically-important threshold of 6.80 for the first time since Sept. 2, 2010, according to data from the China Foreign Exchange Trade System.

In China’s spot foreign exchange market, the yuan is allowed to rise or fall by 2 percent from the central parity rate each trading day. The central parity rate of the yuan against the dollar is based on a weighted average of prices offered by market makers before the opening of the interbank market each business day.

Trump defeated Democratic candidate Hillary Clinton in U.S. presidential election Tuesday, and the dollar has rallied against several major currencies since Wednesday on the back of a string of positive economic data and the expectation of a looming U.S. interest rate hike.

The predictions of an interest rate increase by the U.S. Federal Reserve in December did not change after the presidential election, which led to a stronger dollar and weaker non-dollar currencies, said Liu Yangyi, an analyst with the Bank of China.

The number of Americans applying for unemployment aid fell more than market expectations last week as the job market kept improving, according to latest data, which strengthened the rationale for a U.S. interest rate increase.

U.S. equities are reaching new highs as some investors believe that Trump is likely to cut taxes, which they believe will provide stability to the market and bolster economic growth.

However, experts caution that the day-to-day foreign exchange market can be volatile, and there is no basis for persistent yuan depreciation as China continues to witness steady economic growth, progress in economic restructuring and a stable financial market.

The recent depreciation of major currencies against the dollar was a more passive market response to U.S. interest rate hike expectations, and does not point to weaknesses in China’s economic fundamentals, said Chen Ying, a senior analyst at CITIC Securities.

The dollar index, which measures the dollar against six major currencies, including the euro and sterling, advanced by about 3 percent last month to 98.35 on October 31.

As global markets digested the implications of Trump’s unexpected victory over market-favourite Hillary Clinton, the index slumped to an intra-day low of 95.8875 Wednesday, but strengthened sharply to close at 98.7836 Thursday with market jitters easing.

Some analysts, including Chen, believe that the room for the dollar index to climb further this year is limited.

If the dollar index cannot surpass 100 in the short term, then its room for further increases will be very small, predicted Wan Zhao, a senior analyst with China Merchants Bank.

“It is quite likely that the value of the dollar will oscillate within a band, which will reduce the possibility of sharp depreciation of the yuan and ease pressure of capital outflows,” Wan said.

China has the world’s largest currency hoard, though it fell to 3.12 trillion dollars at the end of October, down 45.7 billion dollars on a month earlier, marking the lowest level since March 2011, but a stronger dollar accounts for much of that change.

Editors Notes:

I would remind you that this blog is produced free for the public good and you are welcome to republish or re-use this article or any other material freely anywhere without requesting further permission.

News & Views welcome always published as long as NO bad language or is not related to subject matter.

To keep online information secure, experts recommend keeping your social media accounts private, changing your passwords often, and never answering unsolicited emails or phone calls asking for your personal information. Need help and guidance visit https://acepchelp.wordpress.com and leave a comment or send a private message on Telegram @Aceone31

Ace News Services Site Links Listed Here:

AceTweet This News

Advertisements

MARKET REPORT: US: Stocks ended mixed on Friday, but recorded hefty weekly gains. The Dow has gained a modest 39.78 points to close at a new all-time high of 18,874.66, and booked its largest weekly gain in five years. The S&P 500 closed down 0.1 percent, with Nasdaq up 0.5 percent at 5,237.11 -@AceFinanceNews

#AceFinanceNews – Nov.11: Dow ends at record, scores best weekly gain in five years
// MarketWatch

The Dow Jones Industrial Average on Friday rose modestly for a fifth session in a row to close at a new all-time high, and booked its largest weekly gain since December 2011. Stocks have rallied since the election of Donald Trump as president as investors bet on sectors likely to benefit from potential fiscal stimulus. On Friday, stocks ended mixed, but recorded hefty weekly gains.

The S&P 500

SPX, -0.14%

closed 3.04 points, or 0.1%, lower at 2,164.44 and booked a 3.8% weekly gain, the largest since October 2014. The Dow Jones Industrial Average

DJIA, +0.21%

gained 39.78 points, or 0.2%, to 18,847.66, and gained 5.4% over the week.

The Nasdaq Composite

COMP, +0.54%

ended the session up 28.32 points, or 0.5%, at 5,237.11 and ended the week 3.8% higher.

The Russell 2000

RUT, +2.46%

outperformed large-cap stocks, rallying 29.23 points, or 2.3% to 1,280.84 to end at a 12-month high. The index of small-cap stocks booked a 10% weekly gain, the best weekly gains since December 2011.

Editors Notes:

I would remind you that this blog is produced free for the public good and you are welcome to republish or re-use this article or any other material freely anywhere without requesting further permission.

News & Views welcome always published as long as NO bad language or is not related to subject matter.

To keep online information secure, experts recommend keeping your social media accounts private, changing your passwords often, and never answering unsolicited emails or phone calls asking for your personal information. Need help and guidance visit https://acepchelp.wordpress.com and leave a comment or send a private message on Telegram @Aceone31

Ace News Services Site Links Listed Here:

AceTweet This News