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devalua$1 Yuan : lapang DADA (04 Februari 2016)… inclusion of YUAN into IMF SDR basket

February 4, 2016
MANFAATken MOMENTUM PENUNDAAN KENAEKAN THE FED FUND RATE K 2016 dengan KEBIJAKSANAAN BI RATE DI BAWAH 7%
Washington, Nov 30, 2015 (AFP)
The International Monetary Fund welcomed China’s yuan into its elite reserve currency basket on Monday, recognizing the ascendance of the Asian power in the global economy.The yuan, also known as the renminbi, will join the US dollar, euro, Japanese yen and British pound in the basket of currencies the IMF uses as an international reserve asset.JAKARTA-Keputusan Dana Moneter Internasional (IMF) memasukkan yuan Tiongkok dalam keranjang mata uang cadangan elitnya hanya didasarkan pada pertimbangan “teknis” , juru bicara Gerry Rice mengatakan, Kamis.Pengumuman IMF tentang pemasukan yuan ke dalam keranjang Special Drawing Rights (SDR)-nya pada Senin, memicu tuduhan bahwa IMF tunduk pada tekanan dari Tiongkok, karena Beijing berupaya mencari pengakuan global yang lebih besar atas kekuatan ekonominya.”Ini adalah proses teknis yang berlangsung selama jangka waktu panjang dan keputusan yang secara tegas berbasis di kriteria teknis,” kata Rice dalam menanggapi sebuah pertanyaan dalam konferensi pers.Dalam kajian keranjang mata uang SDR, yang berlangsung sekali setiap lima tahun, IMF menetapkan bahwa yuan, juga dikenal sebagai renminbi, memenuhi dua kondisi yang diperlukan — digunakan secara luas dan “bebas digunakan”.”Kriteria tersebut telah ditata sejak awal” dan telah dijelas, kata Rice.”Ini telah dilakukan dengan cara yang mungkin paling transparan,” katanya, menambahkan bahwa keputusan untuk menyertakan yuan itu “sepenuhnya didukung” oleh 188 negara anggota IMF.Rice juga menekankan bahwa “tidak ada hubungan” antara keputusan yuan dan ketidaksabaran beberapa kekuatan negara berkembang, termasuk Tiongkok, atas reformasi macet AS yang akan memberi mereka lebih banyak beban dalam institusi itu.

Yuan akan bergabung dengan dolar, euro, yen dan pound dalam keranjang IMF pada 1 Oktober 2016.(ant/hrb)

Â

http://id.beritasatu.com/international/mf-bantah-keputusan-yuan-tiongkok-adalah-politis/134435
Sumber : INVESTOR DAILY

CATATAN DEPRESIASI (“devaluasi”) YUAN 2014 n 2012:
Bonds | Wed May 23, 2012 5:17am EDT

CHINA MONEY-Yuan depreciation a realistic possibility

* Euro zone crisis worse than expected, dollar jumps

* China economy, including foreign trade, hit hard

* PBOC signals tolerance of measured depreciation

By Lu Jianxin and Pete Sweeney

SHANGHAI, May 23 (Reuters) – Yuan traders are reconsidering a widely-held assumption that the currency would appreciate 2-3 percent this year as an unexpected worsening of global economic conditions and a slowdown in China drives investors toward safer havens.

A debt crisis in the euro zone has of late developed into a political problem as well, with risk aversion driving the dollar index to its highest since September 2010 on Wednesday, casting doubt on whether Beijing can afford to let the yuan to continue to strengthen against the dollar.

More significantly, China posted a stream of weak economic data for April, which caused the People’s Bank of China (PBOC) to hastily reduce banks’ reserve requirement ratios, injecting liquidity into the economy. The news and the ensuing cut exacerbated concerns over the health of the world’s second-largest economy.

As a result, traders say banks and their clients started to erect yuan short positions during the dollar rally this month.

“While the PBOC may not let the yuan to depreciate sharply, moderate depreciation could increasingly be a choice for the government to deter the deterioration of China’s exports,” said a senior trader at a European bank trading at the China Foreign Exchange Trade System (CFETS) in Shanghai.

The PBOC has already signaled that it will tolerate a measured relaxation of the yuan through the officially set midpoint exchange rate. Over the last eight days, the PBOC has consecutively relaxed the midpoint fixing, weakening the official rate by 0.26 percent.

But at the same time, the central bank has kept the midpoint above the spot rate, which some traders interpret as a signal that it intends to keep the exchange rate relatively stable and not permit any sharp decline.

In the medium run, the central bank will decide on the yuan’s direction based on economic events and thus could potentially allow the yuan to depreciate by the end of this year, according to a private survey of eight China-based traders.

The yuan could fall or rise up to about 2 percent in 2012, to trade between 6.46 and 6.2 against the dollar by the end of the year, said the traders, a stark contrast to an overwhelming view for yuan appreciation seen at the beginning of this year.

The traders are not authorised to have their names and organisations to be put on record according to company rules.

MEASURED DEPRECIATION

Spot yuan is trading around 6.33 per dollar on Wednesday, having dropped 0.6 percent so far this year.

And the currency’s real effective exchange rate (REER), which indicates its value against a trade-weighted basket after adjustments based on inflation, fell 0.53 percent for the year through April, according to the latest data issued by the Bank for International Settlements (BIS) issued last week.

A sharply depreciating yuan could divert funds from China and may ended up adding pressure to growth, traders said.

Growth in China’s gross domestic product slowed to a near three-year low of 8.1 percent in the first quarter. Many economists now believe the growth of the world’s second-largest economy could fall below 8 percent in the second quarter.

At the start of this year, many economists forecast that 8.5 percent growth for China for this year would severely startle markets.

“There are so many surprises on the macroeconomic front recently that it will no longer be a surprise if the yuan closes the year with a slight depreciation,” said a dealer at a North American bank in Shanghai.

INFLOWS SLOW

Among a slew of weaker data, weakening foreign trade was particularly striking as it signaled slower capital inflows into China.

Such a slowdown is relieving appreciation pressure on the yuan and reducing the need for the PBOC to intervene in trading to prevent the yuan from rising as it has been done for most of the time over the past decade.

Last week, the PBOC reported that it and Chinese financial institutions sold a net 60.6 billion yuan ($9.6 billion) in foreign exchange in April, suggesting that Chinese companies are increasingly retaining dollars on hand.

Until the fourth quarter of last year, the PBOC and commercial banks typically bought large amounts of dollars from domestic firms eager to trade for yuan, but the slowdown has apparently changed attitudes, traders said.

“The trend for firms to sell their dollars as soon as they got hold of them began reversing from the fourth quarter last year,” said a trader at a Chinese state-owned bank in Shanghai.

“The PBOC no longer needs to buy as many dollars as it did before to help curb the yuan’s appreciation. April’s forex sales indicated that the central bank has already drastically reduced its intervention in trading.”

The wild card, of course, is how the United States, which faces presidential election this year, will respond to a pause in yuan appreciation.

There has always been a strong diplomatic aspect to the yuan exchange rate, and much of the rises in its value against the dollar have been in reaction – albeit usually delayed – to U.S. pressure.

Feb 25, 2014 @ 11:14 PM 44,722 views
Why The Chinese Yuan Is Weakening Against The DollarKenneth Rapoza ,Contributor
Opinions expressed by Forbes Contributors are their own.And there goes the yuan.
Recommended by ForbesFirst of all, it’s not as bad as it looks. Or one should hope. China is still a closed economy. The government controls the foreign exchange rate. But one look at a USD-CNY chart and it’s obvious that the Central Bank of China BACHY +% is worried about something. Either a slow domestic economy, or a worsening international one. The dollar has gone straight up against the yuan since Feb. 18. The currency is now worth 6.12 to the dollar when a month ago it was around 6.04. A year ago it was 6.22, so the yuan continues to appreciate as the market expects, and as the government of China promised.For the fifth consecutive day, the Central Bank has fixed the reference renminbi rate weaker. Over the past five trading days the CNY (onshore renminbi) has lost 0.6% against the dollar and the offshore renminbi — which tends to trade at stronger levels — has lost 1.1%.
Barclays Capital says increased volatility in the carry trade between short U.S. dollar positions and long Chinese yuan are being unwound. Moreover, a weaker yuan is now part of Central Bank short-term strategy. In a worse case scenario, should their strategy not work, spill-over is expected throughout Asia. And maybe even some developed markets with close China ties, such as Japan and Australia.Barclays Capital says increased volatility in the carry trade between short U.S. dollar positions and long Chinese yuan are being unwound. Moreover, a weaker yuan is now part of Central Bank short-term strategy. In a worse case scenario, should their strategy not work, spill-over is expected throughout Asia. And maybe even some developed markets with close China ties, such as Japan and Australia.Although the move is small relative to how most floating currencies trade, it is a significant adjustment for what is essentially still a managed currency. If the weakening persists, says Barclays  Capital analysts Chris Walker and Koon Chow, it could lead to some contagion into other currencies, starting with Taiwanese Dollar and Korean Won.Sustained yuan weakness for offshore and onshore over a few months would have even greater contagion effects.Walker and Chow give two reasons for the Central Bank’s decision to weaken its currency.1. The Carry-Trade.Speculators who are long yuan and short the dollar have added to the volatility. The market now seems to be cleaning out these short dollar positions. With risk-adjusted carry falling elsewhere, investors have also used the dollar-yuan trade to swap their currency positions for higher-yielding and longer duration onshore alternatives, mainly 10-year local government bonds yielding as much as 4.7%. This has the benefit of introducing more two-way risk in to the currency, which is prudent from a long-term financial markets reform perspective. Moreover, it could curb the future growth of carry trade-related inflows that otherwise would complicate the Chinese authorities’ goal of deleveraging some parts of the economy.2. New Thinking at Central BankThere has been a shift to a more neutral policy in a context of weakening growth momentum and looming signs of problems in the financial sector. Let’s not forget the Industrial and Commercial Bank of China’s (ICBC) failed wealth management product China Credit Equals Gold #1. The Central Bank has been worried about its smaller municipal lenders. The ICBC trust fund bailout clearly raised the warning level.If this is the main motivation behind policymakers weakening the currency, then it leaves the door open to further official dollar buying to drive depreciation if growth were to falter further, BarCap economists said on Tuesday in a research note to clients. The last period of depreciation against the dollar since China moved away from the currency peg was between May and July 2012, when it fell around 2%. Year-to-date, the yuan is down around 0.7% to the dollar.Walker and Chow think the weak yuan may be temporary. But if not, it would entail greater spillover to other emerging market currencies, and potentially to developed ones like the Japanese yen. The report did not mention which developed market currencies might be impacted, however.Furthermore, modest depreciation and a further increase in volatility between the mainland yuan and the offshore one, aimed at stopping out carry trades, would be a short-term concern for investors. For Barclays, the yuan will strengthen again this year, finally topping out below 6 to one for the first time.“If we are looking at the beginning of some competitive depreciation — aimed at supporting exports and growth — the contagion implications are greater,” the analysts wrote in a research note today.“In such a scenario, we would expect investors to turn more defensive on regional currencies on expectations that policymakers elsewhere could adjust their currency strategy,” they said.

China’s leaders have warned their people they need to accommodate a “new normal” of economic growth far slower than the rate that propelled the economy into the world’s second-largest in the past two decades. As WSJ’s James T. Areddy and Lingling Wei report:

Now, the rest of the world also needs to get used to the new normal: a China in the midst of a tectonic shift in its giant economy that is rattling markets world-wide.

The slowdown deepening this year is part of a bumpy transition away from an era when smokestack industries, huge exports and massive infrastructure spending—underpinned by trillions in state-backed debt—powered China’s seemingly unstoppable rise. Today, debt has swelled to more than twice the size of the economy, and some of those industries, such as construction and steel, are reeling.

Instead of them, China is pushing services, consumer spending and private entrepreneurship as new drivers of growth that rely less on debt and more on the stock market for funding.

https://i1.wp.com/si.wsj.net/public/resources/images/AI-CR737_CPULSE_G_20150826003908.jpg

The Chinese stock market rout and shock yuan devaluation are unlikely to develop into an economic crisis despite the hit China’s GDP will take from slower growth in the financial services sector, UBS economists say.

They note that equities account for just 13 per cent of household wealth in China, adding that the government will likely continue to use policy tools to stabilise growth and promote more funding to the real economy.

But with more than 10 per cent of Asia-Pacific’s exports going to China last year, it is not surprising that the region has felt pain from the slowdown of the world’s second-largest economy.

UBS Asian currency strategist Tan Teck Leng believes the consequences of yuan devaluation are “outright negative” for Asian currencies as their exports to China, which represent 44 per cent of the region’s GDP, tend to be sizeable while exports to Europe and the United States are exposed to regional competition.

“We believe central banks in the region are unlikely to stem any currency weakening against the US dollar, as disappointing growth numbers across most Asian economies and subdued inflationary pressure give them few reasons to do so,” Mr Tan said.

LESSER THREAT

We believe central banks in the region are unlikely to stem any currency weakening against the US dollar, as disappointing growth numbers across most Asian economies and subdued inflationary pressure give them few reasons to do so.

UBS ASIAN CURRENCY STRATEGIST TAN TECK LENG, on the impact of the US dollar strengthening versus the yuan devaluation

UBS regional chief investment officer Kelvin Tay also downplayed fears that the ringgit’s dramatic falls could presage another Asian financial crisis.

“Much of the current weakness in Asian currencies is due to broad-based US dollar strength. Unlike 1997, Asian central banks, especially those with limited foreign reserves, have welcomed currency weakness as a valve to lessen pressure on economic growth and rectify current account imbalances,” he said.

“With the exchange rate levels fairly aligned with the region’s macro fundamentals, coupled with foreign reserves and current account balances on a much stronger footing than in the late 1990s, a repeat of the Asian crisis is unlikely.”

But while Singapore, Taiwan, South Korea and Thailand have fairly robust current account surpluses that could weather rising US interest rates, their currencies are highly sensitive to further yuan weakness, he said. The Singdollar, which is managed on a trade-weighted basis, will be directly affected by weakness in the yuan and other Asian currencies that track the Chinese currency.

“Investors seeking to hedge against further yuan decline might use one of these currencies as a proxy, since it is less expensive to short low-interest yielding currencies,” Mr Tay said.

While most countries, including Malaysia, still have sufficient current account surpluses to

offset capital outflow, its reserves cover of “six months worth of imports is among the lowest in global emerging markets, while its coverage ratio for short-term external debt is the worst in global emerging markets”.

“That is one reason why the ringgit is under attack. But even at today’s levels, the ringgit has moved beyond that which is justified, based on the decline in commodity prices,” Mr Tay added.

“Malaysia exports a lot of natural gas and palm oil. Those prices haven’t fallen as much, yet the ringgit has fallen 20 per cent over the past 12 months. That is a bit unjustified. But the current account surplus should still remain because a weaker currency means Malaysia will import less as well.”

A version of this article appeared in the print edition of The Sunday Times on August 30, 2015, with the headline ‘China slowdown unlikely to become a crisis: UBS’.
CATATAN DEPRESIASI (“devaluasi”) YUAN 2014 n 2012:
Bonds | Wed May 23, 2012 5:17am EDT

CHINA MONEY-Yuan depreciation a realistic possibility

* Euro zone crisis worse than expected, dollar jumps

* China economy, including foreign trade, hit hard

* PBOC signals tolerance of measured depreciation

By Lu Jianxin and Pete Sweeney

SHANGHAI, May 23 (Reuters) – Yuan traders are reconsidering a widely-held assumption that the currency would appreciate 2-3 percent this year as an unexpected worsening of global economic conditions and a slowdown in China drives investors toward safer havens.

A debt crisis in the euro zone has of late developed into a political problem as well, with risk aversion driving the dollar index to its highest since September 2010 on Wednesday, casting doubt on whether Beijing can afford to let the yuan to continue to strengthen against the dollar.

More significantly, China posted a stream of weak economic data for April, which caused the People’s Bank of China (PBOC) to hastily reduce banks’ reserve requirement ratios, injecting liquidity into the economy. The news and the ensuing cut exacerbated concerns over the health of the world’s second-largest economy.

As a result, traders say banks and their clients started to erect yuan short positions during the dollar rally this month.

“While the PBOC may not let the yuan to depreciate sharply, moderate depreciation could increasingly be a choice for the government to deter the deterioration of China’s exports,” said a senior trader at a European bank trading at the China Foreign Exchange Trade System (CFETS) in Shanghai.

The PBOC has already signaled that it will tolerate a measured relaxation of the yuan through the officially set midpoint exchange rate. Over the last eight days, the PBOC has consecutively relaxed the midpoint fixing, weakening the official rate by 0.26 percent.

But at the same time, the central bank has kept the midpoint above the spot rate, which some traders interpret as a signal that it intends to keep the exchange rate relatively stable and not permit any sharp decline.

In the medium run, the central bank will decide on the yuan’s direction based on economic events and thus could potentially allow the yuan to depreciate by the end of this year, according to a private survey of eight China-based traders.

The yuan could fall or rise up to about 2 percent in 2012, to trade between 6.46 and 6.2 against the dollar by the end of the year, said the traders, a stark contrast to an overwhelming view for yuan appreciation seen at the beginning of this year.

The traders are not authorised to have their names and organisations to be put on record according to company rules.

MEASURED DEPRECIATION

Spot yuan is trading around 6.33 per dollar on Wednesday, having dropped 0.6 percent so far this year.

And the currency’s real effective exchange rate (REER), which indicates its value against a trade-weighted basket after adjustments based on inflation, fell 0.53 percent for the year through April, according to the latest data issued by the Bank for International Settlements (BIS) issued last week.

A sharply depreciating yuan could divert funds from China and may ended up adding pressure to growth, traders said.

Growth in China’s gross domestic product slowed to a near three-year low of 8.1 percent in the first quarter. Many economists now believe the growth of the world’s second-largest economy could fall below 8 percent in the second quarter.

At the start of this year, many economists forecast that 8.5 percent growth for China for this year would severely startle markets.

“There are so many surprises on the macroeconomic front recently that it will no longer be a surprise if the yuan closes the year with a slight depreciation,” said a dealer at a North American bank in Shanghai.

INFLOWS SLOW

Among a slew of weaker data, weakening foreign trade was particularly striking as it signaled slower capital inflows into China.

Such a slowdown is relieving appreciation pressure on the yuan and reducing the need for the PBOC to intervene in trading to prevent the yuan from rising as it has been done for most of the time over the past decade.

Last week, the PBOC reported that it and Chinese financial institutions sold a net 60.6 billion yuan ($9.6 billion) in foreign exchange in April, suggesting that Chinese companies are increasingly retaining dollars on hand.

Until the fourth quarter of last year, the PBOC and commercial banks typically bought large amounts of dollars from domestic firms eager to trade for yuan, but the slowdown has apparently changed attitudes, traders said.

“The trend for firms to sell their dollars as soon as they got hold of them began reversing from the fourth quarter last year,” said a trader at a Chinese state-owned bank in Shanghai.

“The PBOC no longer needs to buy as many dollars as it did before to help curb the yuan’s appreciation. April’s forex sales indicated that the central bank has already drastically reduced its intervention in trading.”

The wild card, of course, is how the United States, which faces presidential election this year, will respond to a pause in yuan appreciation.

There has always been a strong diplomatic aspect to the yuan exchange rate, and much of the rises in its value against the dollar have been in reaction – albeit usually delayed – to U.S. pressure.

Feb 25, 2014 @ 11:14 PM 44,722 views
Why The Chinese Yuan Is Weakening Against The DollarKenneth Rapoza ,Contributor
Opinions expressed by Forbes Contributors are their own.And there goes the yuan.
Recommended by ForbesFirst of all, it’s not as bad as it looks. Or one should hope. China is still a closed economy. The government controls the foreign exchange rate. But one look at a USD-CNY chart and it’s obvious that the Central Bank of China BACHY +% is worried about something. Either a slow domestic economy, or a worsening international one. The dollar has gone straight up against the yuan since Feb. 18. The currency is now worth 6.12 to the dollar when a month ago it was around 6.04. A year ago it was 6.22, so the yuan continues to appreciate as the market expects, and as the government of China promised.For the fifth consecutive day, the Central Bank has fixed the reference renminbi rate weaker. Over the past five trading days the CNY (onshore renminbi) has lost 0.6% against the dollar and the offshore renminbi — which tends to trade at stronger levels — has lost 1.1%.
Barclays Capital says increased volatility in the carry trade between short U.S. dollar positions and long Chinese yuan are being unwound. Moreover, a weaker yuan is now part of Central Bank short-term strategy. In a worse case scenario, should their strategy not work, spill-over is expected throughout Asia. And maybe even some developed markets with close China ties, such as Japan and Australia.Barclays Capital says increased volatility in the carry trade between short U.S. dollar positions and long Chinese yuan are being unwound. Moreover, a weaker yuan is now part of Central Bank short-term strategy. In a worse case scenario, should their strategy not work, spill-over is expected throughout Asia. And maybe even some developed markets with close China ties, such as Japan and Australia.Although the move is small relative to how most floating currencies trade, it is a significant adjustment for what is essentially still a managed currency. If the weakening persists, says Barclays  Capital analysts Chris Walker and Koon Chow, it could lead to some contagion into other currencies, starting with Taiwanese Dollar and Korean Won.Sustained yuan weakness for offshore and onshore over a few months would have even greater contagion effects.Walker and Chow give two reasons for the Central Bank’s decision to weaken its currency.1. The Carry-Trade.Speculators who are long yuan and short the dollar have added to the volatility. The market now seems to be cleaning out these short dollar positions. With risk-adjusted carry falling elsewhere, investors have also used the dollar-yuan trade to swap their currency positions for higher-yielding and longer duration onshore alternatives, mainly 10-year local government bonds yielding as much as 4.7%. This has the benefit of introducing more two-way risk in to the currency, which is prudent from a long-term financial markets reform perspective. Moreover, it could curb the future growth of carry trade-related inflows that otherwise would complicate the Chinese authorities’ goal of deleveraging some parts of the economy.2. New Thinking at Central BankThere has been a shift to a more neutral policy in a context of weakening growth momentum and looming signs of problems in the financial sector. Let’s not forget the Industrial and Commercial Bank of China’s (ICBC) failed wealth management product China Credit Equals Gold #1. The Central Bank has been worried about its smaller municipal lenders. The ICBC trust fund bailout clearly raised the warning level.If this is the main motivation behind policymakers weakening the currency, then it leaves the door open to further official dollar buying to drive depreciation if growth were to falter further, BarCap economists said on Tuesday in a research note to clients. The last period of depreciation against the dollar since China moved away from the currency peg was between May and July 2012, when it fell around 2%. Year-to-date, the yuan is down around 0.7% to the dollar.Walker and Chow think the weak yuan may be temporary. But if not, it would entail greater spillover to other emerging market currencies, and potentially to developed ones like the Japanese yen. The report did not mention which developed market currencies might be impacted, however.Furthermore, modest depreciation and a further increase in volatility between the mainland yuan and the offshore one, aimed at stopping out carry trades, would be a short-term concern for investors. For Barclays, the yuan will strengthen again this year, finally topping out below 6 to one for the first time.“If we are looking at the beginning of some competitive depreciation — aimed at supporting exports and growth — the contagion implications are greater,” the analysts wrote in a research note today.“In such a scenario, we would expect investors to turn more defensive on regional currencies on expectations that policymakers elsewhere could adjust their currency strategy,” they said.

China’s leaders have warned their people they need to accommodate a “new normal” of economic growth far slower than the rate that propelled the economy into the world’s second-largest in the past two decades. As WSJ’s James T. Areddy and Lingling Wei report:

Now, the rest of the world also needs to get used to the new normal: a China in the midst of a tectonic shift in its giant economy that is rattling markets world-wide.

The slowdown deepening this year is part of a bumpy transition away from an era when smokestack industries, huge exports and massive infrastructure spending—underpinned by trillions in state-backed debt—powered China’s seemingly unstoppable rise. Today, debt has swelled to more than twice the size of the economy, and some of those industries, such as construction and steel, are reeling.

Instead of them, China is pushing services, consumer spending and private entrepreneurship as new drivers of growth that rely less on debt and more on the stock market for funding.

https://i1.wp.com/si.wsj.net/public/resources/images/AI-CR737_CPULSE_G_20150826003908.jpg

The Chinese stock market rout and shock yuan devaluation are unlikely to develop into an economic crisis despite the hit China’s GDP will take from slower growth in the financial services sector, UBS economists say.

They note that equities account for just 13 per cent of household wealth in China, adding that the government will likely continue to use policy tools to stabilise growth and promote more funding to the real economy.

But with more than 10 per cent of Asia-Pacific’s exports going to China last year, it is not surprising that the region has felt pain from the slowdown of the world’s second-largest economy.

UBS Asian currency strategist Tan Teck Leng believes the consequences of yuan devaluation are “outright negative” for Asian currencies as their exports to China, which represent 44 per cent of the region’s GDP, tend to be sizeable while exports to Europe and the United States are exposed to regional competition.

“We believe central banks in the region are unlikely to stem any currency weakening against the US dollar, as disappointing growth numbers across most Asian economies and subdued inflationary pressure give them few reasons to do so,” Mr Tan said.

LESSER THREAT

We believe central banks in the region are unlikely to stem any currency weakening against the US dollar, as disappointing growth numbers across most Asian economies and subdued inflationary pressure give them few reasons to do so.

UBS ASIAN CURRENCY STRATEGIST TAN TECK LENG, on the impact of the US dollar strengthening versus the yuan devaluation

UBS regional chief investment officer Kelvin Tay also downplayed fears that the ringgit’s dramatic falls could presage another Asian financial crisis.

“Much of the current weakness in Asian currencies is due to broad-based US dollar strength. Unlike 1997, Asian central banks, especially those with limited foreign reserves, have welcomed currency weakness as a valve to lessen pressure on economic growth and rectify current account imbalances,” he said.

“With the exchange rate levels fairly aligned with the region’s macro fundamentals, coupled with foreign reserves and current account balances on a much stronger footing than in the late 1990s, a repeat of the Asian crisis is unlikely.”

But while Singapore, Taiwan, South Korea and Thailand have fairly robust current account surpluses that could weather rising US interest rates, their currencies are highly sensitive to further yuan weakness, he said. The Singdollar, which is managed on a trade-weighted basis, will be directly affected by weakness in the yuan and other Asian currencies that track the Chinese currency.

“Investors seeking to hedge against further yuan decline might use one of these currencies as a proxy, since it is less expensive to short low-interest yielding currencies,” Mr Tay said.

While most countries, including Malaysia, still have sufficient current account surpluses to

offset capital outflow, its reserves cover of “six months worth of imports is among the lowest in global emerging markets, while its coverage ratio for short-term external debt is the worst in global emerging markets”.

“That is one reason why the ringgit is under attack. But even at today’s levels, the ringgit has moved beyond that which is justified, based on the decline in commodity prices,” Mr Tay added.

“Malaysia exports a lot of natural gas and palm oil. Those prices haven’t fallen as much, yet the ringgit has fallen 20 per cent over the past 12 months. That is a bit unjustified. But the current account surplus should still remain because a weaker currency means Malaysia will import less as well.”

A version of this article appeared in the print edition of The Sunday Times on August 30, 2015, with the headline ‘China slowdown unlikely to become a crisis: UBS’.

mmmmmmmOOOOOOOOOOOmmmmmmmm

the world weekly: The Chinese central bank on Monday boosted the price of its yuan currency by more than 0.5%, the most in a decade, ahead of an International Monetary Fund review that could see the yuan’s inclusion in its Special Drawing Rights basket of top currencies. Foreign exchange analysts said China’s application to the IMF was the only plausible explanation for the move by the People’s Bank of China [PBOC]. The intervention came amid signs that the slowdown in Chinese manufacturing output and exports had decelerated in October, but continued to shrink nonetheless.What you need to know:

  • The PBOC fixed the yuan’s mid-price at 341 basis points, or 0.54%, stronger at 元6.3154 to the US dollar, despite no additional demand from the private sector.
  • The IMF board will meet on an as-yet undecided date during November and, among other issues, take a decision whether to include the Chinese yuan in the SDR basket of currencies.
  • The private Caixin/Markit China Manufacturing Purchasing Manager’s Index improved to 48.3 points in October from 47.2 in September. It is the highest reading since June, but a score of above 50 is required to indicate an increase in manufacturing output.
  • The new-exports sub-index showed a marked improvement to 50.7 from 44.6 in September, however, indicating the positive impact of government stimulus.
  • Those numbers are lower than the official Purchasing Manager’s Index reading of 49.8 for October, unchanged from September.

China’s market mess

Our “daily dispatches” track short-term Chinese indicators—the CSI index of 300 Shanghai and Shenzhen stocks and the yuan-dollar exchange rate—refreshed every 24 hours with end-day closing figures throughout the working week.

http://infographics.economist.com/2015/ChinaDaily/

IN EARLY July 2015 we launched our Chinese market “daily dispatches” in response to China’s stockmarket crash which saw share-prices drop by a third, wiping out some $3.5 trillion in wealth (more than the total value of India’s stockmarket). These daily updates were designed to help readers keep abreast of the markets as Beijing attempted to keep them under control. A further mammoth plunge followed around five weeks later on August 24 —China’s “Black Monday”— and a fall of similar proportions the next day delivered another devastating blow, seeing share-prices down over 40% below their 2015 peak and losing all ground gained since the beginning of that year.

The markets appeared to settle down shortly afterwards, and we ceased “live tracking” the data around mid-September (stocks actually gained more than 20% subsequently). But as of January 7th 2016 we are restarting the engines. China’s stockmarket was closed on January 4th after the CSI 300 index of blue-chip stocks plummeted 7%, and January 7th witnessed a tumble of similar magnitude, again causing a halt – this time, all in the space of 14 minutes making it the shortest day’s trading in Chinese stockmarket history.

On January 19th, China reported its official annual GDP growth figure for 2015 at 6.9%, just a shade lower than 2014’s 7.3%. That is some achievement, given the turmoil in emerging markets and the sheer size ($10 trillion) of the economy. But the plunging Chinese stockmarket, the global commodity collapse and downward pressure on the yuan have fuelled a prevalent view that reality is grimmer. The two main concerns are that growth is weaker than the government says, and that much worse lies ahead.

 

Beijing – Tingkat paritas tengah nilai tukar mata uang China renminbi atau yuan, melemah tujuh basis poin menjadi US$6,5585, Kamis (21/01/2016). Demikian menurut Sistem Perdagangan Valuta Asing China.

Di pasar spot valuta asing China, yuan diperbolehkan untuk naik atau turun sebesar dua persen dari tingkat paritas tengahnya setiap hari perdagangan.

Tingkat paritas tengah yuan terhadap dolar AS didasarkan pada rata-rata tertimbang harga yang ditawarkan oleh pelaku pasar sebelum pembukaan pasar uang antar bank setiap hari kerja.

http://pasarmodal.inilah.com/read/detail/2268483/yuan-china-melemah-7-poin-terhadap-dolar-as
Sumber : INILAH.COM

WASHINGTON okezone – Setelah World Bank, kini giliran International Monetery Fund (IMF)memangkas proyeksi pertumbuhan global untuk ketiga kalinya dalam waktu kurang dari setahun. Hal ini seiring ekonomi Beijing yang tumbuh pada laju paling lambat dalam 25 tahun terakhir.IMF memandang perlambatan tajam di China akibat menurunnya ekspor dan lemahnya harga komoditas. Keadaan ini akan memberikan dampak signifikan bagi Brasil dan pasar negara berkembang lainnya.

Oleh karena itu, IMF memprediksi ekonomi dunia akan tumbuh 3,4 persen pada 2016 dan 3,6 persen pada 2017. Perkiraan tersebut masing-masing lebih rendah 0,2 persen dari yang dibuat pada Oktober 2015. Oleh karena itu, otoritas China diminta untuk dapat membuat kebijakan jangka pendek.

IMF mengatakan, risiko perlambatan permintaan curam di China untuk pertumbuhan global dan perkiraan impor dan ekspor yang lemah dari China akan membebani pasar negara berkembang lainnya dan para eksportir komoditas.

“Kami tidak melihat perubahan besar dalam fundamental ekonomi di China, dibandingkan dengan apa yang mereka buat enam bulan yang lalu, tapi pasar sangat ketakutan dengan peristiwa sekecil apa pun, karena mereka merasa sulit untuk menafsirkan,” kata konselor ekonomi IMF Maurice Obstfeld dalam pernyataannya, seperti dilansir Reuters, Rabu (20/1/2016).

IMF memperbarui World Economic Outlook pasar keuangan global setelah kekhawatiran atas perlambatan China. IMF memperkirakan ekonomi China akan tumbuh 6,3 persen pada 2016 dan 6 persen pada 2017, yang merupakan slowdowns tajam sejak 2015.

(mrt)

china daily: China’s growth will slow to 6.3% this year and 6.0% by 2017, although global growth is forecast to rise to 3.4% in 2016 and 3.6% next year, the International Monetary Fund said inits World Economic Outlook update.

“The pickup in global activity is projected to be more gradual than in the October 2015 WorldEconomic Outlook, especially in emerging market and developing economies,” the IMF said inits report, issued on Tuesday.

“Risks to the global outlook remain tilted to the downside and relate to ongoing adjustments inthe global economy; a generalized slowdown in emerging market economies, China’srebalancing, lower commodity prices and the gradual exit from extraordinarily accommodativemarket conditions in the United States. If these key challenges are not successfully managed,global growth could be derailed,” the IMF added.

“This coming year is going to be a year of great challenges and policymakers should bethinking about short-term resilience and ways they can bolster it, but also about the longer-term growth prospects, ‘’ said Maurice Obstfeld, the IMF’s Economic Counsellor and Directorof Research.

“These long-term actions will actually have positive effects in the short run by increasingconfidence and increasing people’s faith in the future,” he added.

Robert Bergvist, chief economist at SEB, said China was now experiencing a cyclicalslowdown, which was coupled with a structural slowdown as the economy became moremature, as the country took steps to become a developed economy.

“China’s importance to the global economy and financial markets is growing and we (the restof the world) must realise that China is an economic superpower. This is good for the worldeconomy but it means also that the problems China will experience in the future will beshared by the many countries. It’s also interesting how China will use its chairmanship of theG20 in 2016; This means that Beijing holds considerable sway over the global economicpolicy agenda this year,” he added.

The IMF said China’s overall growth was evolving broadly as forecast, although there hadbeen a faster-than-expected slowdown in imports and exports, in part reflecting weakerinvestment and manufacturing activity.

It also said there were market concerns about China’s future economic performance, althoughthe Washington-based body said manufacturing activity and trade remained weak worldwide,not just because of China but also because of subdued demand and a decline in investmentin what it called extractive industries.

The dramatic decline in imports in a number of emerging and developing markets alsoweighed heavily on world trade.

The IMF report, which was written before oil prices fell even further after December, said theplummeting price of oil had strained the fiscal positions of some producing countries;increased expectations of a sustained increase in production by OPEC members was alsohad an effect.

The report was also written before the lifting of sanctions against Iran, announced this pastweekend, which some analysts said would release a further 1 million barrels of crude a yearonto the oil markets, further depressing the price.

Risks to be faced included a sharper-than-expected slowdown in China, which would have aknock-on effect on trade, commodity prices and confidence, a further appreciation of thedollar, with tighter financing conditions exposing vulnerability in emerging markets. This couldinclude adverse effects on corporate balance sheets and fund-raising problems for those withhigh dollar exposure.

The IMF also warned that continuing political tension in various regions would hit global trade,finance flows and tourism.

Bergvist said excess production capacity, weak balance sheets of state enterprises andforeign currency debts will hamper economic growth but added ” I don’t believe in a hardlanding.”

The IMF said there were two sides to the decline in the commodity markets; the downsideincludes a worsening outlook for already-fragile commodity producers, and widening yields onenergy sector debt could mean a broader tightening of credit.

The upside, however, means a rapid decline in oil prices may lead to stronger demand inconsumer countries that import oil, based in part on perceptions by the consumer that priceswill stay lower for longer.

“All in all, there is a lot of uncertainty out there, and I think that contributes to the volatility, andwe may be in for a bumpy ride this year, especially in the emerging and developing world,”Obstfeld concluded.

“The IMF forecast for Chinese growth is not new or too much out of consensus. The UBSforecast is 6.2 for 2016, and 5.8 for 2017,” said Tao Wang, Chief Economist at UBS.

“These forecasts are lower than the likely official growth target of 6.5pct. For us, we think theongoing property destocking and knock-on effect on the industrial sector will continue to putdownward pressure on the economy, which will not likely be fully offset by policy support. Inaddition, the need to closing `zombie’ companies and excess capacity will also mean slowergrowth. ‘’ she said

“Despite this, China at 6.2pct or 6.3pct will still be a top contributor to global growth. Oneshould not be surprised at or emphasize too much at China slowing, since it is already a $10trillion economy. ‘’

Obstfeld told a press conference in London that China’s rebalancing of its economy wouldhave larger spillover effects than previously anticipated.

“Currency management is one area that China’s government needs to have more clearcommunications with the market,” Obstfeld told reporters.

The IMF said India and other emerging markets in Asia are expected to continue “at a robustpace” although China’s rebalancing and broader global manufacturing weakness may havean effect.

Beijing beritasatu – Diplomat tertinggi Tiongkok, Kamis (14/1), mengingatkan bahwa dunia bisa menghadapi krisis keuangan baru setelah pasar mengalami gejolak di awal tahun ini, yang penyebab utamanya antara lain kekhawatiran terhadap perlambatan ekonomi di Tiongkok.

“Tidak mungkin untuk sepenuhnya menafikan kemungkinan krisis ekonomi sekali lagi berlangsung. Masalah ini tidak boleh diabaikan,” kata Penasehat Negara Tiongkok Yang Jiechi.

Ia menambahkan bahwa umat manusia sekarang hidup era perubahan yang konstan dan transformasi intens. Peluang dan juga tantangan sama-sama luar biasa.

Berbicara pada pertemuan perwakilan G-20 di Beijing, dalam rangka pertemuan puncak pada September 2016 di kota Hangzhou, Yang mengingatkan bagaimana para anggota forum bekerja sama untuk meningkatkan kepercayaan setelah krisis global 2008.

Yang mengatakan, mencegah atau mengurangi efek negatif dari langkah-langkah kebijakan dalam negeri negara-negara adalah tugas mendesak. Ia tampaknya merujuk pada kenaikan suku bunga acuan di Amerika Serikat (AS). “G20 tegas menentang proteksionisme,” ucap Yang.

Pasar saham global, termasuk Asia, kembali tergelincir, pada perdagangan Kamis. Bursa Shanghai dan Shenzhen dibuka melemah tajam setelah sell-off di Wall Street pada penutupan Rabu karena kekhawatiran terhadap ekonomi Tiongkok belum hilang.

Komentar Yang keluar sehari setelah data resmi menunjukkan data perdagangan Tiongkok pada 2015 jatuh 8% year-on-year menjadi US$ 3,96 triliun. Angka itu jauh di bawah target pertumbuhan pemerintah yaitu tumbuh 6%.

Tarik ulur kebijakan dan intervensi di pasar saham domestik, bersama dengan depresiasi tak terduga nilai tukar yuan, telah merusak kepercayaan terhadap kemampuan pemerintah Tiongkok untuk menindaklanjuti reformasi. Tiongkok tengah menjalani transisi untuk menggeser perekonomian dari ketergantungan pada ekspor dan investasi menjadi berbasis pengeluaran konsumen.

Tapi Yang menegaskan bahwa ekonomi Tiongkok akan mempertahankan tren keseluruhan pertumbuhan yang berkelanjutan dan stabil.

Tiongkok mencatat kinerja ekonomi terburuk sejak krisis keuangan global pada kuartal ketiga 2015, dengan produk domestik bruto (PDB) naik hanya 6,9% atau terendah dalam enam tahun.

Data resmi ekonomi kuartal keempat dan pertumbuhan tahunan akan dirilis, pekan depan.

Aksi jual di Asia dan Eropa terjadi, Kamis, karena para investor tergerak oleh jatuhnya harga minyak mentah dan makin besarnya kekhawatiran terhadap prospek ekonomi global.

Kejatuhan di Wall Street, Rabu, memangkas rally selama dua sesi sebelumnya dan memupus harapan rebound berkelanjutan setelah mengalami awal yang buruk pada 2016.

Harga minyak mentah dunia pekan ini sempat anjlok hingga di bawah US$ 30 per barel atau terendah dalam 12 tahun karena kelebihan pasokan dan penurunan pasokan terkait perlambatan ekonomi Tiongkok.

Leonard AL Cahyoputra/PYA

AFP/Investor Daily

Beijing, Jan 13, 2016 (AFP)
China’s total trade volume fell seven percent year-on-year to 24.59 trillion yuan (around $3.74 trillion) in 2015, Customs said Wednesday, hit by slowing growth in the world’s second-largest economy and plunging commodity prices.

The figure was far below the government’s target of six percent and marks the fourth year in a row that external commerce had missed its goal.

China’s imports slumped 13.2 percent on the previous year to 10.45 trillion yuan, Customs said, while exports were down 1.8 percent to 14.14 trillion yuan.

Imports have been hit by low prices for commodities such as oil and iron ore and the slowdown in China’s infrastructure boom, while exports have had to struggle with weakness in partner economies.

The figures put in doubt China’s title as the world’s biggest trader in goods. US trade figures will not be released until February, but for the first 11 months of the year US trade amounted to $3.48 trillion on a total balance of payments basis, according to figures from the US census bureau.

However, overall global trade contracted last year, Bloomberg News reported, so that China’s export performance was relatively strong.

“China actually outperformed the rest of the world in exports, with its share in global exports rising,” it cited Larry Hu, head of China Economics at Macquarie Securities in Hong Kong, as saying in a report ahead of the data.

A spokesman for China’s Customs said in a statement that “foreign trade of private enterprises shows vitality”.

“Progress has been made in efforts to diversify trade partners,” the spokesman added. The European, United States and the Association of South-East Asian Nations are China’s top three trading partners.

China’s annual trade surplus leaped 56.7 percent to 3.69 trillion yuan, Customs said.

– Better than expectations –

December’s figures offered a rare bright spot for the economy. Exports rose 2.3 percent year-on-year to 1.43 trillion yuan, Customs said, well ahead of economists’ forecasts of a 4.1 percent fall according to Bloomberg News.

China has lowered the value of its yuan currency in recent weeks and months, which should make its exports more competitive on world markets.

“The economy has shown signs of stabilisation. The export figures came in better than expectations,” Ma Xiaoping, a Beijing-based analyst at British bank HSBC, told AFP.

“The depreciation of yuan helped with exports and overseas demand also strengthened with increasing new export orders. But it’s still uncertain whether this recovery is sustainable or not.”

Imports fell 4.0 percent to 1.05 trillion yuan in the month, an improvement on the pace of decline in November. The December trade surplus jumped 24.7 percent to 382.05 billion yuan.

Global investors have been alarmed by slowing growth in the world’s second-largest economy, which is expected to have expanded last year at its slowest pace in a quarter of a century.

Official data on fourth-quarter and annual growth is due to be released next week.

Beijing is seeking to transition the country’s growth model away from reliance on exports and fixed-asset investment towards a consumer-driven economy, but the reform is proving bumpy.

China logged its worst economic performance since the global financial crisis in the third quarter of 2015, with gross domestic product (GDP) rising just 6.9 percent — its lowest level in six years.

wf-bur/slb/dan

<org idsrc=”isin” value=”GB0005405286″>HSBC</org>

<org idsrc=”isin” value=”AU000000MQG1″>MACQUARIE GROUP</org>

Currency Wars

Central bankers aren’t usually the ones who fight wars. But the global economy is a dangerous place, full of threats to prosperity. That’s given rise to the idea that there’s a tussle for competitive advantage going on, with each country brandishing its currency as a weapon. The standard view assumes policy makers are driving down exchange rates so that goods made by their exporters can be sold cheaper overseas, providing a jump-start to the economy at home. When other nations retaliate, it ignites a currency war. Central bankers say they’re not trying to pick fights. Rather, they’re cutting interest rates and taking other steps to stimulate growth. That creates spillover, however, as money flees for countries with higher rates, pushing currencies higher and hurting exporters. Whether intentional or not, these unspoken currency wars still create peril — and real winners and losers.

The Situation

The battle erupted again as China allowed the yuan to weaken after its first major devaluation in more than two decades in August. The slide raised concern that China could depreciate its currency further in 2016 to revive a slowing economy. Foreign-exchange markets were jolted when Switzerland surrendered its three-year-old limit for the franc against the euro in 2015 and nations from Canada to Singapore unexpectedly eased monetary policy. At least 24 countries cut interest rates last year, with the European Central Bank pushing further into negative territory. The currency wars have simmered for years as countries fought their way out of the recession triggered by the 2008 financial crisis. The U.S., Japan and Europe used bond-buying plans in addition to rate cuts to stimulate their economies. As the recovery limped along, central bankers eased policy further to ward off deflation, or a drop in prices that can cripple spending and sap growth. Who’s taking the hit? Mainly the U.S., where the first interest rate increase in almost a decade pushed the dollar higher against all 16 of its major peers in 2015.

Source: Bloomberg News
SOURCE: BLOOMBERG NEWS

The Background

Brazilian Finance Minister Guido Mantega gave the currency wars their name in 2010 when he denounced what he saw as the deliberate pursuit of weaker currencies. His country had been an early casualty in the fight, after lower U.S. rates sent money flowing into emerging markets, making Brazil’s commodity exports more expensive. One big winner was Japan, as the yen lost a third of its value against the dollar from the start of 2012 to the end of 2014, propelling profits for companies like Toyota. The most famous frenzy of competitive devaluations came during the Great Depression of the 1930s, as countries abandoned the gold standard that had pegged their currencies to the value of the metal. Until its collapse in 1971, theBretton Woods system prevented a repeat of such beggar-thy-neighbor strategies by linking the value of many currencies to the dollar. Over the last decade, China has faced criticism for holding down the value of the yuan, as cheap goods helped transform the country into an exporting powerhouse.

The Argument

With central banks embracing unconventional policies to protect their economies, the race to the bottom has taken on new momentum. The fallout from policy moves can rattle markets, whipsaw capital flows and fuel volatility. More countries have turned to currency pegs to stabilize their exchange rates, There are calls for clearer communication and a more united stance from the world’s central bankers, since currency fluctuations create uncertainty and can crimp investment. The G-20 group of countries regularly renews its pledge to refrain from competitive currency devaluations, though it has stopped short of criticizing any nation for doing so. All the while, U.S. exporters are feeling the pain, putting the recovery of the world’s largest economy at risk. There’s a debate about how long the world’s economies can fight, and how they might make peace in the currency wars.

THE REFERENCE SHELF

  • A Bloomberg Brief newsletter explored the roots of the currency wars.
  • “Currency Wars: The Making of the Next Global Crisis,” a book by Jim Rickards.
  • Nouriel Roubini, an economist at the New York University Stern School of Business, explains the conflict in this article.
  • A research paper on currency manipulation from Joseph Gagnon, a former official at the U.S. Federal Reserve and the U.S. Treasury.

BEIJING chinaDAILYasia – Overseas experts say that the Chinese economy is making major strides in theright direction, as the country is undergoing an upgrade of its development pattern from aninvestment- and export-driven model to one driven by innovation and consumption.

Great changes

Over the past few decades, particularly since the adoption of the policy of reform and openingup in 1978, great changes have taken place in economic development in China, and thepeople’s livelihood has significantly improved as a result, in sharp contrast to what used to bein the past.

For centuries, China continued to disappoint foreign businessmen, “not least because manyordinary people have been too poor to buy anything.” But great changes have taken place inthe Chinese economy over recent years, which is being driven by new engines such as e-commerce, said a report published on The Economist in September.

Official data showed that the scale of China’s e-commerce financial market reached 6 billionyuan ($937 million) in 2013 and online trade exceeded 15 billion yuan ($2.34 billion) in 2014.With a growth rate estimated to reach 94 percent in the next three years, the whole e-commerce market is expected to exceed 100 billion yuan ($15.62 billion) in 2017.

New sectors of the Chinese economy have seen such rapid growth thanks to the optimizationand upgrade of its structure.

In the eyes of Stephen Roach, senior fellow of Yale University’s Jackson Institute of GlobalAffairs, China has two models of economy: the old one driven by fixed investment andexports, and the new one boosted by private consumption.

The old model, which fueled China’s economy growth in the past three decades, isdecelerating, while the new model is still in its incipient stage, he said at a seminar held inChina Institute of Global Affairs in November.

Services activity grew 8.4 percent year on year in the first half of 2015, far outstripping the6.1-percent growth in manufacturing and construction, according to an article written byRoach recently.

In 2014, the service sector contributed 48.2 percent to China’s Gross Domestic Product(GDP), exceeding the combined 42.6 percent share of manufacturing and construction,according to the article.

The shift toward a services-based new model lifted the downside pressures in themanufacturing-based old model, he said.

Roach predicated that the service sector could account for 65 percent to 70 percent ofChina’s economy in next 20 years.

“The key understanding of China is not the number of GDP, but the mix of economy,” saidRoach.

Market still attractive

In the eyes of some entrepreneurs, the Chinese market, despite the slowdown, is stillattractive as it is being reinvigorated by the Chinese government’s reform and the new modelof the Chinese economy will generate great opportunities.

“China’s economy is headed for a rough year or two, but the longer-term outlook for businessremains positive. Our members are staying here and investing in China’s future growth,”another report of The Economist quoted Jorg Wuttke, president of the EU Chamber ofCommerce in China, as saying.

John Rice, vice chairman of General Electric Co, agrees that the easy gains in China havebeen made, but reckons that “many firms haven’t tried hard enough.”

With a population of 1.4 billion, China packs such a punch that even niche markets like onlinedining and nail salons can amount to more than the entire car industry in a smaller country,the report cited Rice as saying.

Many of China’s people are getting richer all the time, the report said.

McKingsey, a consultancy, estimates that by 2020 the proportion of urban households withannual incomes of 15,000-33,000 US dollars (a rough definition of the country’s middle class)will be 59 percent, against only 8 percent in 2010, according to the report.

“Chinese consumers are fast becoming the world’s most discriminating and knowledgeable.They are also quite brand licentious. The choice of top global brands there is much wider thanin America, Europe or Japan. This has resulted in fierce competition, pushing firms to comeup with ever more inventive offerings,” the report said.

Clear-headed leadership

Roach, the US expert on China, said an economic rebalance highlighting services andconsumption does not mean that Beijing has ignored traditional sources for growth.

The Chinese government has unveiled the “Made in China 2025” plan, the first 10-year actionplan designed to transform China from a manufacturing giant into a world manufacturingpower, and “Internet Plus” action plan that aims to integrate the Internet with traditionalindustries and fuel economic growth.

The move is in accordance with the innovation strategy highlighted by the Chineseleadership, which they think is the key to avoid falling into the middle income trap, a theorizedeconomic development situation where a country which attains a certain income will get stuckat that level, Roach said.

McKinsey also said that China’s manufacturing industry is not declining. Instead, it isbenefiting from the investment on labor productivity, automation and regional network ofsupply, while the underdeveloped service industry will produce great opportunities.

Louis Kuijs of the Royal Bank of Scotland pointed out that China’s income per person atmarket exchange rates in 2013 was only 13 percent of that of the United States, so there isplenty of scope for catch-up growth, particularly if the government adopts reforms that free upthe private sector, according to the Economist report.

“China can look back on 2015 and be well satisfied with its economic performance,” saidProfessor James Laurenceson, deputy director of Australia-China Relations Institute,University of Technology Sydnedy.

“I’m reassured that China’s leaders appear clear-headed about what needs to be done.Reform and challenging vested interests is never easy in any country but on the basis of whatwe’ve seen this year, there is greater cause for optimism than pessimism,” Laurenceson said.

Besides, Beijing’s measures to encourage the development of renewable energy and greenindustry that helps reduce contamination, protect the environment and change China’s currentenergy structure, have “broad prospects for development,” Sun Qingyun, associate director ofthe US-China Clean Energy Research Center at West Virginia University, told Xinhua.

Both Chinese enterprises and households have potential in reducing energy consumption.Upgrading some energy-consuming and outdated equipment and improving energy efficiencywill create new opportunities for investment and become a new approach for driving economicgrowth, Sun said.

Beijing – Tingkat paritas tengah nilai tukar mata uang China renminbi atau yuan, menguat 130 basis poin menjadi 6,3851 terhadap dolar AS, Jumat (04/12/2015). Demikian menurut Sistem Perdagangan Valuta Asing China.

Di pasar spot valuta asing China, yuan diperbolehkan untuk naik atau turun sebesar dua persen dari tingkat paritas tengahnya setiap hari perdagangan. Tingkat paritas tengah yuan terhadap dolar AS didasarkan pada rata-rata tertimbang harga yang ditawarkan oleh pelaku pasar sebelum pembukaan pasar uang antar bank setiap hari kerja.

http://pasarmodal.inilah.com/read/detail/2257275/yuan-china-menguat-130-poin-terhadap-dolar-as
Sumber : INILAH.COM

 

BOGOR.kontan. Lembaga Moneter Internasional (IMF) telah mengungkapkan keberadaan proposal, untuk memasukan Yuan kedalam keranjang mata uang Special Drawing Rights (SDR).

Artinya, jika disetujui maka Yuan akan setara dengan dollar AS, euro, yen dan poundsterling sebagai mata uang acuan aset internasional.

Jika demikian, apa dampaknya bagi Indonesia?

Menteri Keuangan Bambang Brodjonegoro mengatakan hal tersebut akan berdampak jika Indonesia memiliki aset dalam bentuk renmimbi.

Misalnya, jika suatu saat Indonesia mengeluarkan surat utang dalam bentuk renmimbi maka bisa diklaim sebagai mata uang global.

“Itu artinya Yuan sudah men jadi hard currency,” kata Bambang, Senin (23/11) di Istana Bogor.

Selain itu dalam pencatatan cadangan devisa juga, keberadaan Yuan bisa dijadikan acuan dan diperhitungkan.

Dengan begitu, bila Indonesia menumpuk Yuan bisa menambah jumlah cadangan devisa.

Dampak lainnya, maka keberadaan Yuan di pasar juga akan jauh lebih mudah untuk didapatkan.

Karena Yuan sudah menjadi mata uang internasional, membuat suplainya gampang.

chinadailyasia: RMB may make SDR a better stabilizer

By Zhu Qiwen

The inclusion of the Chinese currency into the International Monetary Fund’s basket of currency reserves looks imminent now.

Some domestic investors are very excited about the expected rise in overseas demand for the Chinese currency and assets that may help boost the stock market at home.

At the same time, some international media have played down the decision as being of token political importance because the IMF’s Special Drawing Right assets remain little used other than as an accounting device.

Both views sound plausible.

But the first wishfully exaggerates the benefit of the Chinese currency acquiring the status of a global reserve currency and ignores the fact that it will also facilitate outflows of domestic capital.

China became a net capital exporter for the first time last year, and latest statistics show that China has made about 589.2 billion yuan ($95 billion) in non-financial investments in overseas markets in the first ten months of 2015, up 16.3 percent year-on-year.

As China is to roll out more investment projects under the Belt and Road Initiative in the coming years, and Chinese enterprises are becoming more eager to expand overseas as domestic profits wane, a better internationalized Chinese currency will definitely accelerate China’s rise as the world’s top capital exporter in coming years.

So while pinning their hopes on foreign demand for Chinese currency and assets, domestic investors should also prepare for the looming impact of a growing outflow of Chinese capital on the domestic stock market.

As to the second view, it fails to see the potential role that a more diversified and better representative SDR may play amid the mounting global financial uncertainties.

Among all the causes of the global slowdown, the United States’ pending decision to raise interest rates has already sown significantly increased global financial market volatility, and its implementation will produce tremendously disruptive moves in capital flows and asset prices.

And as the US adjusts its monetary policy according to its domestic economic conditions, it is more than likely that other countries, especially developing ones that have to finance domestic investment projects with international capital, will bear the brunt of the resulting volatility in the global financial market.

Admittedly, the inclusion of the Chinese renminbi in the SDR is not a direct answer to the excessive dominance of the US dollar in global financing and trade, which far exceeds the US’ share in the world economy. And the IMF can do little about this reality, so the move to make the SDR more diversified and better representative is of only symbolic importance for the moment.

But if the inclusion of the Chinese currency in the SDR is viewed as the end of the beginning, rather than the beginning of the end, its potential to accelerate reforms not only in China’s financial and economic systems but also in the way that the global financial system is governed will make it a move of substantial and far-reaching significance.

Domestically, a more internationalized currency will make financial reforms more urgent than ever to enhance the competitiveness of domestic financial institutions and better serve the real economy.

Internationally, a better representative SDR will equip the IMF with a viable tool to better explore ways for it to play a greater role in stabilizing the global economy by mitigating the impact of global financial market volatility on underrepresented developing countries.

So while the US is fueling uncertainties around the world by still dragging its feet over abandoning zero interest rates, the IMF’s inclusion of the renminbi in its SDR basket of currencies will add some weight to the side of certainty.

The author is a senior writer with China Daily.

zhuqiwen@chinadaily.com.cn

HK STANDARD: Yuan trade curbed

Thursday, November 19, 2015

China has moved to restrict trade at offshore yuan clearing banks, sources said yesterday, stepping up controls even as it positions the currency for inclusion in the International Monetary Fund’s reserve basket.

Three sources with direct knowledge of the matter said offshore yuan clearing banks and related offshore participant banks had been instructed by the central bank to suspend trading in bond repos and yuan account financing.

“We have already temporarily suspended trade in account financing and bond repurchases with onshore banks,” said a trader at an offshore yuan clearing bank.

But yesterday the yuan fell to a 10-week low after a central bank official said China should accelerate the opening of its capital account, spurring talk there will be less intervention once it wins reserve currency status.

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The onshore yuan closed at 6.3849. China’s holdings of US Treasury securities fell to the lowest level since February as it pared its foreign reserves to back the yuan. The holdings were down US$12.5 billion (HK$97.5 billion) from August to US$1.258 trillion in September. REUTERS

BEIJING kontan. Christine Lagarde, Managing Director Badan Moneter Internasional (IMF) pada akhir pekan lalu (13/11) menyatakan dukungannya atas penemuan proposal staf IMF untuk memasukkan yuan China ke dalam keranjang mata uang Special Drawing Rights (SDR).

“Saya mendukung penemuan staf IMF,” demikian pernyataan Lagarde.

Sekadar informasi, SDR merupakan aset internasional yang nilainya mengacu pada sekeranjang mata uang utama dunia. Saat ini, ada empat mata uang yang masuk dalam keranjang SDR, yakni: dollar AS, euro, yen, dan poundsterling.

Menurut Lagarde, dirinya akan memimpin pertemuan jajaran direksi IMF pada 30 November mendatang. Salah satu agenda utamanya adalah untuk mempertimbangkan dimasukkannya yuan ke dalam keranjang SDR.

Memang sebelumnya, Beijing terus mendorong agar yuan dapat masuk ke dalam keranjang IMF. Ini merupakan bagian dari tujuan strategi jangka panjang China untuk mengurangi tingkat ketergantungannya terhadap dollar AS.

Masuk ke dalam keranjang SDR akan menjadi kemenangan manis bagi Beijing. Sebab, hal ini akan mendongkrak permintaan yuan di pasar finansial dunia dan menjadi simbol dimulainya China sebagai negara dengan perekonomian kedua terbesar dunia.

Berdasarkan hasil penemuan staf IMF, yuan atawa renminbi, sudah memenuhi kriteria dapat digunakan secara bebas atau digunakan secara luas dalam transaksi internasional. Selain itu yuan juga sudah banyak diperdagangkan di pasar forex.

Staf IMF juga sudah memberi lampu hijau atas upaya Beijing dalam menangani sejumlah permasalahan yang teridentifikasi pada laporan yang dirilis Juli lalu.

Jajaran eksekutif IMF, yang mewakili 188 anggota IMF, sepertinya juga akan mendukung penemuan dan rekomendasi staf IMF. Tak terkecuali Prancis dan Inggris yang menyatakan dukungannya terhadap keinginan Beijing.

Jika IMF menyetujui hal ini, maka, masuknya yuan ke keranjang SDR akan berlaku efektif pada Oktober 2016. Dengan demikian, Beijing akan memiliki waktu untuk mempersiapkan diri.

Semisal yuan berhasil mendapatkan 70% dukungan dari jajaran direksi IMF, maka ini merupakan kali pertama dalam sejarah jumlah keranjang mata uang SDR ditambah.

“Saya menilai, kemungkinan yuan masuk ke dalam keranjang mata uang IMF sangat tinggi. Satu-satunya faktor yang dapat menggagalkan hal ini adalah penolakan AS. Namun, berdasarkan pernyataan sejumlah petinggi AS tidak menunjukkan indikasi ke arah sana,” jelas Shen Jianguang, chief economist Mizuho Securities Asia.

Reformasi ekonomi

Memang, China sudah melakukan sejumlah reformasi beberapa waktu terakhir untuk meliberalisasi pasar finansial mereka serta membantu yuan dalam memenuhi persyaratan IMF.

Sejumlah kebijakan yang dilakukan antara lain menetapkan batasan suku bunga deposito, menerbitkan surat utang tiga bulanan pada setiap pekan, dan memperbaiki transparansi data China.

Ekonom menilai, dengan masuknya yuan ke dalam keranjang mata uang IMF, China harus membangun kepercayaan dengan investor global dan pemerintahan dunia.

Pasalnya, intervensi yang masih dilakukan China untuk mengerem kejatuhan pasar saham mereka pada musim panas lalu dan devaluasi yuan yang dilakukan secara mengejutkan pada Agustus, memicu keraguan pelaku pasar mengenai komitmen Beijing dalam melakukan reformasi.

Zhou Hao, ekonom Commerzbank yang berbasis di Singapura mengatakan China harus meningkatkan reformasi domestik dan memperbaiki transparansi kebijakan pemerintah.

“People Bank of China (PBOC) harus mengurangi frekuensi intervensinya di pasar, dan menyerahkannya pada mekanisme pasar,” jelas Hao.

Di sisi lain, PBOC menyatakan, pernyataan IMF merupakan pengakuan atas kemajuan yang dicapai China dalam melakukan reformasi dan membuka perekonomian mereka.

“Inklusi renminbi dalam keranjang SDR akan meningkatkan keterwakilan dan daya tarik SDR, sekaligus membantu memperbaiki sistem moneter internasional saat ini, yang akan menguntungkan China dan negara lain di dunia,” demikian pernyataan resmi PBOC.

PBOC juga menegaskan, pihaknya akan menghormati keputusan direksi IMF dan terus melakukan reformasi ekonomi.

Di balik kengototan China

Sebenarnya, apa alasan China ngotot memasukkan yuan ke dalam keranjang SDR?

Menurut Marc Chandler, senior vice president and the global head of curreny strategy Brown Brothers Harriman, dengan melambatnya perekonomian Negeri Panda, memangkas nilai (devaluasi) mata uang mereka menjadi salah satu cara untuk mendongkrak kembali ekonomi.

Namun, hal itu tidak terjadi pada tingkat ekspor sejumlah negara yang mata uang negaranya melemah. Sebut saja Jepang, Kanada, atau Australia. Meski mata uang mereka melemah secara signifikan, namun tidak diikuti kenaikan pada tingkat eskpor.

Memang, secara bertahap, nilai tambah pada rantai manufaktur China mengalami kenaikan. Namun, biaya yang melibatkan yuan masih terbilang kecil dibanding negara perekonomian besar lainnya.

Itu berarti, tingkat ekspor China tak terlalu sensitif dengan fluktuasi yuan, dibanding Jepang. Depresiasi yuan sebesar 3%-4% disinyalir tak akan berdampak besar terhadap ekspor China.

Banyak yang berpendapat, strategi China terhadap yuan bertujuan untuk merkantilisme. Ini merupakan sistem ekonomi uantuk mengerek pertumbuhan negara melalui peraturan pemerintah di seluruh kepentingan komersial suatu negara.

“Ini pendapat yang keliru,” jelas Chandler kepada Caixin.com.

Menurut Chandler, intrik yang dilakukan China terhadap mata uang mereka didisain untuk meningkatkan internasionalisasi yuan. Secara khusus, upaya yang dilakukan pemerintah China ini dalam konteks mendorong yuan sehingga bisa masuk dalam keranjang mata uang SDR IMF.

Ada dua persyaratan utama untuk mencapai tujuan tersebut: menjadi eksportir besar dan memiliki mata uang yang dapat diakses secara bebas. Persyaratan pertama tak sulit dicapai China. Tak diragukan, China merupakan eksportir terbesar dunia.

Yang menjadi masalah saat ini adalah aksesibilitas yuan yang terbatas. “Kendati begitu, China terus berupaya memperbaikinya,” jelas Chandler.

Lalu, apa alasan China bergabung ke SDR?

“Sepertinya ini merupakan isu status dan prestis. “Cukup jelas bahwa ada tendensi China merasa diremehkan oleh Amerika dan negara-negara maju lainnya dan tidak mendapat penghormatan yang seharusnya mereka dapatkan,” paparnya.

Chandler menyontohkan, China tidak diberikan hak suara di IMF. Lalu, kesepakatan Trans-Pacific diatur sedemikian rupa sehingga sulit bagi China untuk bergabung selama bertahun-tahun lamanya.

Dengan bergabung dengan SDR, ini bisa menjadi batu loncatan bagi China untuk lebih dihargai di dunia internasional.

LONDON (MarketWatch) — The perpetrators of Friday’s murderous attacks in Paris may have wished to drive a wedge through the international state community. In fact, one of the principal consequences of the massacre, as the weekend response of the Group of 20 leading economies showed, will be rapprochement among the U.S., Russia, China and Europe.

In the financial sphere, Friday’s approval by the International Monetary Fundapproval by the International Monetary Fund of the Chinese renminbi’sUSDCNY, -0.0141%   inclusion in to the special drawing right marks a broadening and deepening of the multilateralism under which the Fund was established seven decades ago. Friday’s decision, expected to be backed by the IMF’s board on Nov. 30, represents the first time that a currency of a developing country becomes a de jure reserve asset — official recognition of a momentous shift in the world power balance.

International coordination may turn out to be synonymous with strengthening individual states and shoring up “strong leaders” who may value security more than human rights.

Weekend talks on Syria between U.S. President Barack Obama and Russian President Vladimir Putin at the G-20 in Antalya, Turkey, underline how two countries divided by Moscow’s invasion of Crimea are sinking their differences in a joint fight against the ISIS terrorist movement.

In similar vein, expected U.S. approval of the SDR change may herald American efforts to draw closer to Beijing in security and military issues, lowering emphasis on discord over cyberspace attacks or tension over Asian territorial claims.

The IMF’s ruling that the renminbi is “freely usable” and thus can be included in the SDR from next October — despite the persistence of some Chinese capital controls — has geopolitical parallels. Lending weight to the IMF statement, capital flowed back into China last month for the first time since Beijing allowed the currency to fall in August as part of IMF-ordained efforts to integrate China more closely into the global economy.

Paris Attacks Addressed at Group of 20 Summit

(1:51)World leaders gathered in Antalya, Turkey, for the Group of 20 Summit, where they addressed how they planned to move forward after Friday’s attacks in Paris, France. Photo: AP

Adjustment to global political realities may require departure from fully fledged ideals of Western liberalism. International reaction to what French President François Hollande correctly called an act of war portends deep-seated changes for Europe. International coordination may turn out to be synonymous with strengthening individual states and shoring up “strong leaders” who may value security more than human rights.

The response east and west of the war zone of Syria and Iraq will significantly weaken the always-overstated concept of a border-free Europe that has plainly contributed to establishment of militarily organized terrorist cells within the EU. The aftermath of Paris will require a radical shake-up of European immigration procedures, reinforcing nationalist hardliners whether in Berlin, Paris, Budapest or Ankara.

In Germany, where Chancellor Angela Merkel has come under fire for well-meaning but naïve statements extending an over-welcoming hand to immigrants, the center-left coalition is likely to succumb to pressure for border controls. Finance Minister Wolfgang Schäuble has moved closer to an outright bid to dislodge Merkel, launching a thinly veiled attack on her last week by saying: “You can trigger avalanches when a rather careless skier goes on to the slope … and moves a bit of snow.”

Turkey’s President Recep Tayyip Erdogan, Hungarian Prime Minister Viktor Orbán and Polish party chief Jaroslaw Kaczynski are all leaders likely to benefit from a hardening of nationalist sentiment in Europe.

Hollande has no choice but to move to the right to ward off a growing offensive from former President Nicolas Sarkozy and National Front chief Marine Le Pen. Hollande’s Socialist party faces a further setback in French regional elections next month and the presidential poll in April-May 2017 where, on present showing, Le Pen will win the first round and lose the run-off vote to a right-wing mainstream candidate.

IBT: China’s currency, the yuan seems to be on track to be included in the International Monetary Fund’s benchmark currency basket, putting it on par with the dollar, euro and pound sterling. A draft report by IMF staff who have been assessing the yuan’s technical criteria seems to be favourable.

Three people who had been briefed on the IMF discussions, said a draft report reached a favourable conclusion on including the yuan. “Everything is on course technically and there is no obvious political obstacle. The report leans clearly towards including the RMB in the [basket] but leaves the decision for the board,” one of the officials told Reuters. “There is no real discussion, no obstacles, all seems on course,” another IMF official said.

A positive review by IMF staff will lower the hurdle for board approval as a 70% voting majority is needed rather than the 85% which is normally set for tough decisions. The IMF’s executive board is currently reviewing the Special Drawing Right (SDR), an international reserve comprising the major currencies – the euro, Japanese yen, pound sterling and the dollar.

The SDR composition is reviewed every five years. There have been suggestions that China’s central bank has been aggressively trying to ensure that the yuan makes it to the basket in the current review.

The review was scheduled to take place in November this year. However, the IMF has said that it is extending the SDR valuation basket by nine months from 31 December, 2015 to 30 September 2016, effectively deferring the widely-anticipated addition of the yuan to the basket.

The fund had said that the proposal for the extension was put forward by its staff in a paper published in August. The extension paper was submitted to the executive board for review. In its statement it said the extension would give users, among others, sufficient time to adjust in the event of an addition of a new currency to the basket.

Joining the SDR could not only boost the yuan’s international recognition and the use of the currency globally, it is also expected to lift China’s financial power. The move is also seen as Beijing’s long-term goal of reducing its dependence on the dollar and to place the world’s second largest economy as a serious economic power in the international arena.

So how hard is it going to be to get a Yes vote?

Eswar Prasad, a professor at Cornell University and former head of IMF China Division said: “I think it will be very difficult for the IMF, especially given all that China has done this year, to deny China the prize it really wants,” he said. France and the UK have backed the move and Germany and Italy are among several who have said they are open to the move, depending on whether the yuan meets the technical criteria. The US is believed to have given conditional support for the yuan joining the SDR.

China recently rolled out a series of reforms to liberalise its markets in a bid to help the yuan meet the criterion of being “freely usable” or widely used to make international payments and traded on foreign exchange markets. On Friday, China’s central bank announced that it was freeing the interest rate market by scrapping a ceiling on deposit rates.

That is not all. China has started the weekly issue of three-month Treasury bills and plans to extend yuan trading hours to overlap with Europe. All these add to the tick boxes in the checklist of the technical criteria.

Implications of yuan inclusion

Since the last SDR review, the global use of yuan has increased dramatically. It has become the fourth most-used currency in global payments with a 2.79% share in August, surpassing the yen, according to the Society for Worldwide Interbank Financial Telecommunication or Swift.

Bloomberg noted that adding the yuan to the SDR may also “help the IMF improve its standing with the Chinese”. It said China and other emerging markets were supposed to gain greater representation in the IMF under reforms agreed in 2010 but the US Congress has yet to ratify the changes.

So what will happen when the yuan is placed in the SDR? According to Standard Chartered PLC and AXA Investment Managers, a least $1tn of global reserves are expected to migrate to Chinese assets. And foreign companies’ issuance of yuan-denominated securities in China, known as panda bonds, could surpass $50bn in the next five years, according to World Bank’s International Finance Corp.

“Once the Chinese yuan becomes part of the SDR, a central-bank reserve managers and institutional investors will automatically want to accumulate yuan-denominated assets,” Hua Jingdong, vice president and treasurer at IFC said. “It will be strategically important for China to welcome all kinds of issuers to become regular issuers in China’s onshore market.”

reuters: China’s yuan moved closer to joining other top global currencies in the International Monetary Fund’s benchmark foreign exchange basket on Friday after Fund staff and IMF chief Christine Lagarde gave the move the thumbs up.

The recommendation paves the way for the Fund’s executive board, which has the final say, to place the yuan CNY=CFXS CNY= on a par with the U.S. dollar .DXY, Japanese yen JPY=, British pound GBP= and euro EUR= at a meeting scheduled for Nov. 30.

Joining the Special Drawing Rights (SDR) basket would be a victory for Beijing, which has campaigned hard for the move, and could increase demand for the yuan among reserve managers as well as marking a symbolic coming of age for the world’s second-largest economy.

Staff had found the yuan, also known as the renminbi (RMB), met the criteria of being “freely usable,” or widely used for international transactions and widely traded in major foreign exchange markets, Lagarde said.

“I support the staff’s findings,” she said in a statement immediately welcomed by China’s central bank, which said it hoped the international community would also back the yuan’s inclusion.

Staff also gave the green light to Beijing’s efforts to address operational issues identified in a report in July, Lagarde said.

The executive board, which represents the Fund’s 188 members, is seen as unlikely to go against a staff recommendation and countries including France and Britain have already pledged their support for the change. This would take effect in October 2016, during China’s leadership of the Group of 20 bloc of advanced and emerging economies.

China has rolled out a flurry of reforms recently to liberalize its markets and also help the yuan meet the IMF’s checklist, including scrapping a ceiling on deposit rates, issuing three-month Treasury bills weekly and improving the transparency of Chinese data.

Economists said with the yuan’s inclusion in the IMF basket as a reserve currency now looking like a formality, China should step up efforts to build trust between global investors and its policy makers.

China’s heavy-handed intervention to stem a stock market rout over the summer, and an unexpected devaluation of the yuan in August, had raised some doubts about Beijing’s commitment to reforms.

Singapore-based Commerzbank economist Zhou Hao said China needs to further accelerate domestic reforms and improve policy transparency.

“The PBOC should reduce the frequency of market intervention, allowing market forces to really play a critical role.”

The United States, the Fund’s biggest shareholder, has said it would back the yuan’s inclusion if it met the IMF’s criteria, a U.S. Treasury spokesperson said, adding: “We will review the IMF’s paper in that light.”

If the yuan’s addition wins 70 percent or more of IMF board votes, it will be the first time the number of currencies in the SDR basket – which determines the composition of loans made to countries such as Greece – has been expanded.

“I would say that the likelihood of China’s yuan joining the IMF currency basket this year is very high,” said Hong Kong-based Shen Jianguang, chief economist at Mizuho Securities Asia.

“The only thing that could deter this is if the U.S. led a group rejecting the yuan’s inclusion, which could complicate things. But the United States’ current official stance doesn’t reflect such an attitude,” he said.

Some currency analysts say making the yuan the fifth currency in the basket could eventually lead to global demand for the currency worth more than $500 billion.

But China’s extensive capital controls mean it would take a while before the yuan rivals the dollar’s dominant role in international trade and finance, analysts say.

Its closed capital account still limits foreigners from buying yuan-denominated assets and places caps on how much cash residents can take out of the country. These restrictions, along with concerns that the yuan is set to come under steady depreciation pressure, may cause corporates to back off from holding yuan.

Nonetheless, the People’s Bank of China said the IMF statement was an acknowledgment of the progress China had made in reforms and opening up its economy.

“The inclusion of the RMB in the SDR basket would increase the representativeness and attractiveness of the SDR, and help improve the current international monetary system, which would benefit both China and the rest of the world,” the PBOC said in a statement.

China would respect the board’s decision and continue to deepen economic reforms, the PBOC said.

(Additional reporting by Timothy Ahmann in Washington, Jason Subler in Beijing and Brenda Goh in Shanghai; Editing by James Dalgleish & Shri Navaratnam)

Washington, Nov 13, 2015 (AFP)
IMF experts recommended Friday that the Chinese yuan be included in the Fund’s SDR basket of currencies, backing a strong push by Beijing to join the elite grouping.

Now the world’s second-largest economy, China asked last year for the yuan to be added to the grouping, but until recently the yuan’s exchangeability on international markets has been deemed too tightly controlled by Beijing for it to fully qualify.

IMF chief Christine Lagarde said in a statement that the staff experts, in their report to the IMF board, ruled the yuan or renminbi (RMB) now “meets the requirements to be a ‘freely usable’ currency.”

That was a key hurdle to the yuan joining the yen, dollar, pound and euro in the Fund’s “special drawing rights” currency basket, seen as the leading currencies of international commerce.

After years of keeping the yuan tightly controlled, China has moved over the past few years to allow it to be more widely used in international transactions.

Lagarde said the staff experts ruled that Beijing has addressed “all remaining operational issues” required for SDR inclusion, which will be decided by the executive board at a November 30 meeting.

“I support the staff’s findings,” she said, adding to expectations that the board will also back the yuan.

The Fund has been generally receptive to the idea that the yuan could join the other four currencies in the grouping.

While not a freely traded currency, the SDR is important as an international reserve asset, and because the IMF issues its crisis loans — crucial to struggling economies like Greece — valued in SDRs.

On August 4 the IMF said the yuan fell short of meeting all the standards for inclusion, particularly on being “freely usable” in international finance.

China’s economic slowdown complicated Beijing’s efforts to widen the currency’s use to meet that requirement.

But there was strong pressure to do so because the IMF reviews the SDR basket only every five years, and the deadline for the current review is the end of the year.

In a move seen as trying to accommodate China’s push for inclusion, on August 19 the Fund announced that it had extended by nine months the implementation of the basket revision, giving more time for adjustment to the potential inclusion of the yuan.

If a decision to include the yuan is made this month, the actual inclusion could take place as late as September 30, 2016, giving Beijing more time to prepare.

“The extension would also allow users sufficient lead time to adjust in the event that a decision were to be taken to add a new currency to the SDR basket,” the IMF said at the time.

The recommendation Friday was broadly backed by the United States.

“As we have previously stated, we intend to support the renminbi’s inclusion in the Special Drawing Rights basket provided the currency meets the International Monetary Fund’s existing criteria,” the Treasury Department said.

“We will review the IMF’s paper in that light.”

Washington, Nov 12, 2015 (AFP)
The IMF’s consideration of China’s yuan for inclusion in its SDR basket of elite currencies is on track with a decision possibly this month, Fund spokesman Gerry Rice said Thursday.

With inclusion of the yuan in the SDR makeup a key policy goal of Beijing, Rice declined to speculate on the decision.

But he noted that a crucial qualification, international use of the currency, also called the renminbi, is progressing.

“The renminbi internationalization continues,” Rice told reporters at a news briefing.

The board of the International Monetary Fund is expected to discuss China’s application to join the SDR this month.

The Fund has been generally receptive to the idea that the yuan could join the US dollar, British pound, the euro and Japanese yen in the makeup of the SDR (special drawing right).

While not a freely traded currency, the SDR is important as an international reserve asset, and because the IMF issues its crisis loans, crucial to struggling economies like Greece, valued in SDRs.

China, now the world’s second-largest economy, asked last year for the yuan to be added to the grouping.

But until recently the yuan’s exchangeability on international markets has been too tightly controlled by Beijing for it to fully qualify.

On August 4 the IMF said the currency fell short of meeting all the standards for inclusion, particularly on being “freely usable” in international finance.

But China’s economic slowdown has complicated Beijing’s efforts to widen its use and movements in its valuation, especially because the IMF reviews the SDR basket only every five years, and the deadline for the current review is the end of the year.

In a move seen as trying to accommodate China’s push for inclusion, on August 19 the Fund announced that it had extended by nine months the implementation of the revision, giving more time for adjustment to the potential inclusion of the yuan.

So that if a decision to include the yuan is made this month, that actual inclusion could take place as late as September 30, 2016, giving Beijing more time to prepare.

“The extension would also allow users sufficient lead time to adjust in the event that a decision were to be taken to add a new currency to the SDR basket,” the IMF said at the time.

the world weekly: The Chinese central bank on Monday boosted the price of its yuan currency by more than 0.5%, the most in a decade, ahead of an International Monetary Fund review that could see the yuan’s inclusion in its Special Drawing Rights basket of top currencies. Foreign exchange analysts said China’s application to the IMF was the only plausible explanation for the move by the People’s Bank of China [PBOC]. The intervention came amid signs that the slowdown in Chinese manufacturing output and exports had decelerated in October, but continued to shrink nonetheless.

What you need to know:

  • The PBOC fixed the yuan’s mid-price at 341 basis points, or 0.54%, stronger at 元6.3154 to the US dollar, despite no additional demand from the private sector.
  • The IMF board will meet on an as-yet undecided date during November and, among other issues, take a decision whether to include the Chinese yuan in the SDR basket of currencies.
  • The private Caixin/Markit China Manufacturing Purchasing Manager’s Index improved to 48.3 points in October from 47.2 in September. It is the highest reading since June, but a score of above 50 is required to indicate an increase in manufacturing output.
  • The new-exports sub-index showed a marked improvement to 50.7 from 44.6 in September, however, indicating the positive impact of government stimulus.
  • Those numbers are lower than the official Purchasing Manager’s Index reading of 49.8 for October, unchanged from September.

TOKYO — Pretax profit at Japan’s listed companies is on track to grow around 8% for the year ending in March, with cheap materials, strong overseas sales and a boom in foreign tourism beating back the effects of China’s economic deceleration.

Data was drawn from 1,015 core companies that had released April-September earnings by Friday, or 66% of Japan’s publicly traded corporations. Those surveyed account for 86% of market capitalization in the country. Revenue for fiscal 2015 is seen growing 2%, with 66% of companies expecting profit growth.

Companies in the automotive, electrical and chemical sectors are seen making particularly large gains. “Demand in Europe and North America is more than enough to fill in the dents from slowing emerging economies,” said Hiroto Saikawa, Nissan Motor‘s chief competitive officer.

Exporters on average see the exchange rate at around 118 yen to the dollar for the current half, or 2 yen more than in the year-earlier period. That gap is not as great as in the last half, when the dollar surged by 19 yen from the same period a year earlier. But the cheaper currency should still support profit growth. For every 1 yen softening of the Japanese currency against the dollar, annual profit at Japan’s listed companies grows by 100 billion yen ($814 million) overall, the Daiwa Institute of Research estimates. Thus earnings could get a sizable lift if the yen keeps its current value.

Profit at retailers, railways and other companies dependent on demand at home is also seen gaining. Prices are beginning to rise, and growing numbers of foreign visitors will likely continue to buoy sales.

Mixed factors

Pretax profit rose 11% for the April-September half, supported in part by a recovery in consumer spending after April 2014’s consumption tax hike. Growth was roughly flat for the July-September quarter alone, down from a 24% year-over-year jump for April-June as China’s economic slowdown weighed on earnings. Profitability plummeted for steelmakers in particular as inexpensive Chinese offerings flooded the global market, forcing Nippon Steel & Sumitomo Metal and JFE Holdings to downgrade full-year earnings forecasts.

“Resource prices don’t look likely to recover anytime soon,” Mitsubishi Corp.Chief Financial Officer Shuma Uchino said. Companies with heavy involvement in emerging economies are thus apprehensive about earnings this half. Pretax profit growth is seen at 5%.

Yet full-year gains are still expected to stand out globally, compared with U.S. and other foreign companies.

(Nikkei)

November 2, 2015 10:56 am JST

PBOC raises yuan mid-point by most in single day since 2005 revaluation

SHANGHAI (Reuters) — China’s central bank on Monday raised the midpoint fixing of the yuan currency by the most in a single day since the landmark revaluation of the curreency in 2005.

Monday’s midpoint, the official guidance rate, was set at 6.3154 against dollar, or 0.54 percent stronger than Friday’s fix of 6.3495.

BEIJING. Bursa China dibuka di zona hijau dan merah pada transaksi pagi ini (28/10). Mengutip data Bloomberg, pada pukul 10.54 waktu Shanghai, Shanghai Composite Index turun 0,1% menjadi 3.431,457.

Pergerakan liar bursa China terjadi seiring kecemasan investor mengenai kinerja emiten di kuartal III. Memang, sejumlah perusahaan termasuk China Coal Energy Co dan Ping An Insurance (Group) Co mengumumkan kinerjanya.

Sayangnya, mayoritas kinerja emiten tak sesuai dengan estimasi pelaku pasar. Dari 88 perusahaan di daftar Bloomberg yang merilis kinerja kuartal III, sekitar 69% memiliki kinerja di bawah estimasi.

Alhasil, sejumlah saham pun mengalami penurunan. China Coal, misalnya, turun 0,5%. Sedangkan Ping An turun 1,3%.

“Laporan keuangan emiten tak terlalu baik, khususnya perusahaan berbasis industri tradisional. Saya prediksi, tidak ada sentimen yang mampu mengerek kinerja hingga akhir tahun. Sehingga, investor lebih fokus pada tema investasi terhadap perusahaan kecil,” papar Wang Zheng, chief investment officer Jingxi Investment Management Co.

http://investasi.kontan.co.id/news/cemas-kinerja-emiten-bursa-china-bergerak-liar
Sumber : KONTAN.CO.ID

 

Beijing detik -Otoritas anti korupsi China sedang menyiapkan perluasan pemeriksaan atau inspeksi internal terhadap para entitas atau lembaga negara tahun ini. Bidikan utama adalah lembaga-lembaga keuangan antara lain bank sentral, regulator bidang sekuritas, dan bank-bank Badan Usaha Milik Negara (BUMN), yang merupakan tahap inspeksi ketiga.

Demikian laporan yang dikutip dari Chinadaily, Minggu (25/10/2015)

Berdasarkan rencana pemberantasan korupsi sebelumnya, tim dari Communist Party of China’s Central Commission for Discipline Inspection (CCDI) akan memeriksa semua perusahaan BUMN yang ada di bawah langsung pemerintah pusat. Pihak CCDI akan mengumumkan temuan dari hasil pemeriksaan tahap kedua pada pekan ini.

Dalam pernyataan yang diumumkan setelah pertemuan CCDI Jumat lalu, bahwa pemeriksaan atau inspeksi tahap ketiga akan mencakup bank sentral People’s Bank of China (PBOC), Komisi Perbankan China, Komisi Asuransi China, Komisi Sekuritas China, dan China Investment Corp.

Selain itu, ada juga akan ada pemeriksaan terhadap konglomerat perusahaan keuangan CITIC Group Corporation, bank-bank BUMN bidang industri dan komersial, juga dua perusahaan asuransi besar China yaitu China Life dan the People’s Insurance Company of China.

Bahkan dua perusahaan bursa saham di China yaitu Shanghai Stock Exchange and Shenzhen Stock Exchange keduanya masuk dalam daftar inspeksi.

Sebelumnya pihak Komite Partai Komunis China atau Communist Party of China (CPC) telah mempublikasikan tentang revisi soal regulasi kedisiplinan di lembaga-lembaga negara pada Rabu pekan lalu. Hal ini untuk meningkatkan manajemen 88 juta para anggota CPC dalam mendorong gerakan anti korupsi di China.

Saat ini, banyak pejabat tinggi di China ‘disikat’ terkait tindakan korupsi, antara lain Ling Jihua yang merupakan mantan anggota Komite Pusat dari Partai Komunis China, dan mantan bos BUMN China Resources (Holdings) Co Ltd.

Genderang perang terhadap korupsi sudah dikomandangkan oleh Presiden China Xi Jinping saat mulai menjabat.

Seperti diketahui pertengahan November 2012, suksesi kepemimpinan di China telah dimulai. Partai Komunis China (PKC), partai berkuasa di China, telah mengumumkan kepemimpinan baru di tubuh Partai Komunis China untuk 10 tahun ke depan. Wapres Xi Jinping mengambil alih jabatan presiden dari Hu Jintao, yang kini menjabat ketua partai Komunis China.

(hen/hen)

fortune: Amongst an adverse demographic shift, slumping GDP and a lack of democracy, China’s economic slowdown is looking increasingly fragile.

The UK has rolled out the red carpet for Chinese president Xi Jinping on his five-day official visit. He is being given the royal treatment, including a stay at Buckingham Palace, a ride in a state carriage along The Mall and several banquets. The trip will also include plenty of time with the British prime minister, David Cameron, who is keen to discuss the trade and investment that the UK hopes to secure from the visit.

Britain’s pivot to China is largely based on its economic strength. And yet there is cause for concern. Having been the locomotive for global growth following the financial crisis in 2008, Chinese growth has now slowed and its economy is looking increasingly fragile. The latest GDP figures came in at just under 7%, significantly down from the astounding annual rate of more than 9% per year between 1990 and 2010.

Exports from China have declined, and exports to China must battle against the depreciating yuan. China’s slowdown has depressed global commodity prices, adversely affecting big exporting countries such as Brazil and Russia.

Some leading economists have been very optimistic about China. Nobel Laureate Robert Fogel published an article in 2010 that predicted that China’s GDP will grow at an average annual rate of more than 8% until 2040, when its GDP per capita would be twice that projected for Europe and similar to that in the United States. Fogel used a textbook method of analysis to predict an unrelenting upward path.

But as countries grow, their service sectors tend to increase as a proportion of output and employment. Rates of growth of productivity in services tend to be much lower than in manufacturing or agriculture. Hence, in any economy, growth rates are likely to slow down through changes in economic structure. There are several other reasons why China’s economic growth is set to stall.

1. Demographic shifts

China will experience an adverse demographic shift in the coming decades. Three decades of the one-child policy has reduced the number of adults of working age. The recent and ongoing relaxation of that policy, plus a big decline in infant mortality, increases the number of children. Older people are living longer, due to improved healthcare and reduced poverty. Hence the average number of children and old people, which needs to be supported by each person in work, is set to increase dramatically.

2. Chinese GDP per capita is still low

GDP is way below that of the U.S. and other developed countries. World Bank Figures for 2014 put China’s GDP per capita at about 24% of that in the U.S. In the 20th century, only five countries managed to grow from 24% or less of U.S. GDP per capita to 60% or more of U.S. GDP per capita. They were Japan, Taiwan, South Korea, Singapore and Hong Kong. China still has a long way to go.

3. Lack of democracy

While there is some evidence that autocratic governments can help economic development at lower stages of development, particularly by promoting basic industry and infrastructure, there is strong evidence that democratic institutions are much more suited to higher levels of development. Notably, when Japan, Taiwan and South Korea reached about 45% of U.S. GDP per capita, they were established or emerging democracies. A transition to a more democratic government may be necessary as China develops, but this would be very difficult to achieve — and could be highly disruptive.

4. Lack of openness

A democratic government is but one part of a constellation of vital institutions. As Nobel Laureate Douglass North and his colleagues have argued, dynamic modern economies need checks, balances and countervailing power to minimize arbitrary confiscation by the state. Legal systems have to develop significant autonomy from the political elite. In my book Conceptualizing Capitalism, I show that absolute GDP per capita in a sample of 97 countries is strongly correlated with absence of corruption and openness of government. China is not an outlier in this test.

5. Problems with land and property rights

China’s population is divided into two classes. Chinese citizens are registered with either an urban or rural classification, depending on where they are born. Urban registrants have better education and health services.

Many rural registrants, meanwhile, have rights to the use of land. But these are often anulled after local party officials are bribed by business speculators and sell the land for profit. Frequent local protests result and the whole system of land use is in dire need of radical reform. Currently it fosters corruption and inhibits the skill development of half of the Chinese population.

6. Lack of homegrown talent

Although there are many small firms in China, there are still few mainland-registered large firms. Barry Naughton has noted that of the top 10 firms in China exporting high-tech products, nine were foreign. Offshore registration is understandable, because fear of state sequestration persists in a country that did not recognize private property rights in its constitution until 2007. China’s financial system is very heavily concentrated in state hands, with punitive penalties on private lending.

Thus, there are weighty institutional and demographic drags on further rapid growth in China, especially as it enters intermediate levels of economic development that are ill-suited to the continuance of a one-party state. China can succeed, but only through massive and potentially destabilizing reform of its political and economic institutions. We should not be surprised by even lower growth rates in the future.

Geoffrey M. Hodgson is a research professor at the University of Hertfordshire. This article originally appeared on The Conversation.

 

JAKARTA.   Nilai tukar yuan turun ke level terendah dalam dua pekan pada saat angka deflasi kian mendalam, sedangkan penurunan impor dan pertumbuhan ekonomi pada kuartal ketiga yang diperkirakan turun akan membuat China kian melonggarkan kebijakan.

Produk domestik bruto naik 6,8% selama kuartal ketiga sekaligus merupakan pertumbuhan terendah sejak 2009. Kondisi itu juga akan mengganggu target pertumbuhan dari pemerintah sebesar 7% untuk setahun penuh, menurut rata-rata perkiraan ekonom berdasarkan survei  Bloomberg Senin lalu.

Sedangkan banyak bank China memborong dolar AS di pada saat volumenya lebih rendah dari rata-rata, menurut satu pedagang yang tidak mau disebutkan namanya sebagaimana dikutip Bloomberg, Jumat (16/10/2015).

Yuan turun 0,19% ke 6,3580 per dolar AS pada pukul 12:09 siang waktu Shanghai, menurut nilai yang tertera pada Chinaa Foreign Exchange Trade System. Nilai tukar itu sebelumnya turun ke 6,3581 atau yang terendah sejak 29 September.

Di bursa luar negeri Hong Kong, nilai tukar tersebut mengalami penurunan per pekan terbesar dalam dua bulan setelah kehilangan nilai 0,39%. Yuan melemah 0,27% pada hari ini hingga bergerak ke posisi 6,3633.

&ldquo;Ini merupakan posisi (yang telah terjadi) menjelang dikeluarkannya data PDB yang diperkirakan akan melenceng dari target 7% per tahun,&rdquo; ujar Fiona Lim, Senior Currency Strategist Malayan Banking Bhd. Di Singapura.

Yuan masih akan tertekan pada triwulan ini akibat permintaan dolar untuk korporasi guna membayar utang.

Source : Bloomberg

 

http://finansial.bisnis.com/read/20151016/9/482789/yuan-melemah-china-akan-longgarkan-kebijakan
Sumber : BISNIS.COM

Beijing – Tingkat paritas tengah nilai tukar mata uang China renminbi atau yuan, melemah 34 basis poin menjadi 6,3436 terhadap dolar AS pada Jumat, menurut Sistem Perdagangan Valuta Asing China. Di pasar spot valuta asing China, yuan diperbolehkan untuk naik atau turun sebesar dua persen dari tingkat paritas tengahnya setiap hari perdagangan.

Bank sentral China, People’s Bank of China (PBoC), mereformasi sistem pembentukan nilai tukar pada 11 Agustus menjadi lebih mencerminkan perkembangan pasar dalam nilai tukar yuan China terhadap dolar AS.

Tingkat paritas tengah yuan terhadap dolar AS didasarkan pada rata-rata tertimbang dari harga yang ditawarkan oleh pelaku pasar sebelum pembukaan pasar setiap hari kerja dan juga mengacu pada tingkat penutupan pada hari sebelumnya, dalam hubungannya dengan kondisi penawaran dan permintaan serta pergerakan mata uang utama.

http://pasarmodal.inilah.com/read/detail/2245298/yuan-china-melemah-34-poin-terhadap-dolar-as
Sumber : INILAH.COM

Berdasarkan data resmi Tiongkok yang diumumkan Selasa lalu, penurunan ekspor dan impor Negeri Tirai Bambu berlanjut pada September. Penurunan impor September merupakan yang terbesar sejak Februari. Kondisi itu semakin menegaskan mulai rapuhnya ekonomi Tiongkok sebagai kekuatan ekonomi terbesar kedua di dunia setelah AS.

 

Nilai impor yang didominasi dalam dolar AS anjlok 20,4% melebihi perkiraan semula, dibandingkan bulan yang sama tahun lalu. Sedangkan ekspor turun 3,7%, sehingga menghasilkan surplus perdagangan US$ 60,34 miliar.

 

Perkiraan semula menyebutkan impor Tiongkok akan turun 15% setelah pada Agustus melemah 13,8% dan nilai ekspor sebelumnya diperkirakan turun 6,3% setelah mengalami penurunan sebesar 5,5% pada bulan sebelumnya.

 

&ldquo;Karena ada sedikit kebangkitan dalam harga-harga komoditas, penurunan impor menunjukkan lemahnya permintaan dalam negeri, khususnya permintaan investasi,&rdquo; kata Yang Zhao, ekonom Tiongkok di lembaga konsultan Nomura.

 

Juru bicara kantor Bea dan Cukai Tiongkok menyatakan perekonomian Tiongkok menghadapi tekanan penurunan yang besar. Namun, data perdagangan Tiongkok akan membaik pada kuartal IV-2015 karena pelemahan Yuan bakal membantu daya saing ekspor. Tiongkok bakal mengumumkan pertumbuhan produk domestik bruto (PDB) pada 19 Oktober. Pertumbuhan PDB Tiongkok diperkirakan turun di bawah 7%.

 

Lemahnya perekonomian Tiongkok telah menjadi pukulan bagi kawasan Asia. Pengiriman barang Taiwan dan Korea Selatan, yang menjadikan Tiongkok sebagai konsumen terbesar, turun berturut-turut 14,6% dan 8,3% pada September.

 

Sejalan dengan itu, saham-saham di Wall Street pada perdagangan Selasa lalu waktu AS (Rabu dinihari WIB) ditutup anjlok, menyusul rilis data ekspor-impor Tiongkok yang turun. Kondisi itu diperparah oleh anjloknya harga minyak dunia. Harga minyak mentah yang berkurang US$ 44 sen pada level US$ 46,66 per barel memberika sentimen negatif terhadap pasar.

 

Indeks Dow Jones ditutup melemah 49,97 poin (0,29%) ke level 17.081,89, indeks S&P 500 turun 13,77 poin (0,68%) ke posisi 2.003,69, dan indeks Nasdaq berkurang 42,03 poin (0,87%) ke level 4.797,61. (az)

 

http://id.beritasatu.com/marketandcorporatenews/ekonomi-tiongkok-mulai-merapuh/129722
Sumber : INVESTOR DAILY

INILAHCOM, Beijing – Cadangan devisa China turun menjadi US$3,51 triliun pada akhir September 2015, bank sentral negara itu mengumumkan, Rabu (07/10/2015).

Cadangan devisa menurun 43,26 miliar dolar AS pada September 2015, menandai bulan keempat berturut-turut menurun, menurut bank sentral China (People’s Bank of China).

Tetapi penurunan itu tidak setajam pada Agustus 215. Cadangan devisa turun pada rekor 93,9 miliar dolar AS pada Agustus. Cadangan emas negara itu turun dari US$61,795 miliar pada akhir Agustus 2015 menjadi US$61,189 miliar pada akhir September 2015. [tar] – See more at: http://pasarmodal.inilah.com/read/detail/2243223/cadangan-devisa-china-terus-menurun#sthash.gTYauapF.dpuf

October 7, 2015 6:46 pm JST

China forex reserves post record quarterly fall as cenbank steps up yuan support

BEIJING (Reuters) — China’s foreign exchange reserves posted their biggest quarterly decline on record in July-September, as the central bank stepped up intervention to stabilise the yuan and calm sentiment after an unexpected devaluation of its currency had jolted global markets.

China’s reserves, the world’s largest, dropped $43.3 billion to $3.514 trillion last month, central bank data showed on Wednesday, and were down by about $180 billion in the third quarter in their largest ever quarterly fall, according to Reuters data going back to 1980.

The devaluation of the yuan on Aug. 11, and the consequent fall in reserves have raised questions about how sustainable China’s efforts to support the yuan are, as capital trickles out of the country due to fears of a deepening economic slowdown and prospects of rising U.S. interest rates.

Analysts expect the reserves to fall further.

“The decline in China’s foreign reserves, while less than market expected, still shows that China’s central bank continued the market intervention in the past month,” said Singapore-based Zhou Hao, senior economist in Asia at Commerzbank.

“As PBoC also intervened into the forward market in the past month, the foreign reserves will likely plunge again when these forward contracts mature,” he said.

Policy makers have been determined to calm sentiment after a summer rout in stocks, the yuan devaluation and a series of clumsy attempts by authorities to stabilise equities spread turmoil in global financial markets.

Beijing is also pressing on with attempts to ease concerns about a cooling economy, which is growing at its slowest pace in decades.

The yuan devaluation had sparked worries of a global currency war and raised doubts about Beijing’s ability to manage an economy transitioning from an investment- and exports-led model to one driven by domestic demand.

Indeed, policy insiders have told Reuters that China was so surprised by the reaction to the devaluation that it is likely to keep the yuan on a tight leash in the near-term.

the guardian: A 10% fall in the value of a nation’s currency can boost exports by an average 1.5% of GDP, according to a study by the International Monetary Fund that reveals the benefits of a cut in the exchange rate for foreign trade.

Heightening fears that the global economy is likely to suffer a new round of currency wars, the report said global trade was still dominated by the export of goods such as cars and fridges that sold better after a cut in the exchange rate made them cheaper.

BEARISH YUAN?

Although the Peoples’ Bank of China has said it sees no need for further falls in the yuan, markets expect the currency to decline more over the coming year to reflect a faltering economy.

In the short term, however, analysts say Beijing is keen to restore investor confidence even as a rapid volley of economic and market support measures has produced mixed results so far.

Tim Condon, Singapore-based head of research for Asia at ING Bank, believes Beijing is pushing for the onshore and offshore yuan forward curves to converge again, a situation that prevailed just before the currency was devalued.

“I think their strategy to bring that about is to stablilize the spot rate, intervene in the offshore and the onshore spot markets and hope that the economic data kind of portrays a recovering economy and confidence comes back a bit more,” he said.

“And I think that strategy’s working.”

 

The report forms a key element of the IMF’s world economic outlook, which is due to be published next week when the global lender of last resort holds its biannual meeting in Lima.

Concerns that some of the world’s major nations ducked reforming their economies by opting to devalue their currencies in a desperate dash for trade-driven growth has dogged the debate over the global recovery.

Governments stand accused of embarking on currency wars to defend export industries that would be priced out of global markets without the support of an artificially low exchange rate.

Shinzo Abe, the Japanese prime minister, made it a central plank of his manifesto to improve exports by driving down the value of the yen. He drafted in a new central bank chief, who embarked on a massive programme of electronic money printing similar to the quantitative easing programmes adopted by the Bank of England and US Federal Reserve. The IMF said the yen has fallen by 30% since mid-2012 against a basket of currencies.

The European Central Bank embarked on a similar policy in January, helping the euro to fall by more than 10% since early 2014. Meanwhile, the US dollar is up more than 10% since mid-2014.

The Washington-based organisation said these currency movements since the financial crisis had been “unusually large”, especially the shifts seen in the last couple of years.

“Brazil, China, and India have also seen unusually large changes in their currency values,” it said.

“Not surprisingly, these movements have kindled a debate on their likely effects on trade. Some predict strong effects on exports and imports, based on conventional economic models. Others argue that the increasing fragmentation of production across different countries – the so-called rise of global value chains – means that exchange rates matter far less than they used to for trade, and may have disconnected altogether.”

The IMF’s study found that most trade was still “traditional” and involved the export and import of finished goods and services that were sensitive to price movements.

It said that while global firms have created supply chains that straddle many countries and are insulated from movements in currencies by long-term contracts and hedging instruments, they are not a dominant feature.

IMF officials said they were relieved that a reduction in a country’s exchange rate fed through to trade levels because it meant currency rises and falls continued to act as a rebalancing mechanism in world trade and stimulus to sustainable global growth.

But the wide-ranging report will be seen by some policymakers as providing the evidence governments need to embark on currency manipulation as a means to increase exports.

The finding that a 10% fall in the value of a nation’s currency can boost exports by an average 1.5% of GDP will be enough to spur some governments to adopt policies that devalue their currencies.

Fears have already intensified in recent weeks that Japan will re-double its eforts to drive down the cost of the yen after a 3.5% rise against the dollar and 6.5% jump against sterling in the last month.

Japan’s currency is considered a safe haven in the region, encouraging investors to buy yen assets and drive up its value.

Worried at recent developments, the Bank of Japan governor, Haruhiko Kuroda, said at the weekend that he expects a weaker yen, hinting that the central bank will boost its QE programme.

There is also a warning for the UK, which has suffered a fall in manufacturing exports following a 20% rise in the value of sterling.

The pound has tumbled in recent weeks following a recovery in the euro, but analysts expect the fall to be temporary and for the high value of sterling to continue burdening exporters.

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Steve Inskeep talks to David Wessel, director of the Hutchins Center on Fiscal & Monetary Policy at the Brookings Institution, about his trip to China and his observations about the country’s economy.

STEVE INSKEEP, HOST:

Now let’s get a view of China’s economy from a man who has a global view of it. Our regular guest, David Wessel, has covered the U.S. economy, the markets and the Federal Reserve for many years. In recent days, he traveled to China, the country whose apparent economic troubles have shaken U.S. markets. So what struck his eye? We’re going to ask. He’s on the line.

David, good morning.

DAVID WESSEL: Good morning, Steve.

INSKEEP: The open question here is, is China in a little trouble that it can handle over time or something worst? What do you think?

WESSEL: Exactly. Well, look, it’s abundantly clear that China’s manufacturing sector is a mess, and we have lots of data to prove that – electricity output and stuff like that. They’re very good at counting physical things. The weakness for manufacturing shows up in a reduced appetite for commodities that’s hurting exporters from Canada to South Africa. But China’s trying to shift its economy from manufacturing and big infrastructure to services and consumer spending.

And what we don’t know is how much of the slack those growing sectors are picking up. But what was striking to me in Beijing was that the top economic leadership in China doesn’t know either. They just don’t have very good numbers. There’s nothing like the U.S. monthly jobs report in China.

So the central bank sounds very optimistic – things aren’t so bad, it’ll get better soon. Other parts of the government sound much more worried. One official said to us, China’s economy is in its wintertime – it may be long, it may be short. And I really had to restrain myself from asking him if he was a “Game Of Thrones” fan.

INSKEEP: (Laughter) It sounds like you were not really all that impressed by what the Chinese officials had to say.

WESSEL: Well, you know, it’s hard to exaggerate how little outsiders know about how the Chinese government makes decisions. What surprised me was the sense that there’s so many tensions inside the government about how to manage the economy, how quickly to open up to market forces.

And we saw those tensions erupt when the stock market there crashed and some parts of the government wanted to intervene, so some days they did. Some days they didn’t intervene. It made for a lot of confusion. So they have this State Council in China – 12 officials. They make almost every major decision – interest rates, exchange rates, how quickly should we allow competition in the service sector and so forth.

And unlike the Federal Reserve here or the U.S. Congress, they don’t really explain the rationale for their decisions. That didn’t used to be a big deal, but China’s now such a huge economy that when it makes a move, the implications ricochet around the world. So their inexperience in explaining themselves is really proving to be a big problem, and they were surprised to learn that.

INSKEEP: Is that just a problem of explaining of communications, or is it that they don’t really have an explanation?

WESSEL: I think they’re struggling to come up with a strategy to cope with an economy that’s changing, growing perhaps more slowly than they anticipated. They’re worried about the flow of money out of China, which is a new development. They’re surprised at how much global financial markets in countries like Kazakhstan and Malaysia responded when they devalued their currency.

So I think that for a long time, people in financial markets – and even in the U.S. government – would say, oh, China’s got big problems, but look at their track record. These guys are competent. They can handle this. They have control. And now I hear a lot more people outside and inside China saying maybe these guys don’t know what they’re doing. And frankly, I kind of felt that way when I came home.

INSKEEP: Did you feel that you were in an anxious place, that people were a little tense where you were?

WESSEL: I found that the officials were tense and a bit concerned about the impression they were making on the rest of the world. I didn’t talk to a lot of ordinary Chinese, but I talked to a couple of young women who were on the sidelines of a conference we were at. And I was struck by how little trust they have in anything the government said. They were incredulous that I believed any of the Chinese economic numbers. And they told me both their mothers had been in the stock market and hadn’t gotten out because they were sure the government would take care of it.

INSKEEP: David, thanks very much.

WESSEL: You’re welcome.

INSKEEP: David Wessel, director of the Hutchins Center at the Brookings Institution and a contributing correspondent to The Wall Street Journal.

Copyright © 2015 NPR. All rights reserved. Visit our website terms of use and permissions pages at http://www.npr.org for further information.

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JAKARTA-Tingkat paritas tengah nilai tukar mata uang Tiongkok renminbi atau yuan, menguat 47 basis poin menjadi 6,36613 terhadap dolar AS pada Rabu, menurut Sistem Perdagangan Valuta Asing Tiongkok.

Di pasar spot valuta asing Tiongkok, yuan diperbolehkan untuk naik atau turun sebesar dua persen dari tingkat paritas tengahnya setiap hari perdagangan.

Bank sentral Tiongkok, People&rsquo;s Bank of China (PBoC), mereformasi sistem pembentukan nilai tukar pada 11 Agustus menjadi lebih mencerminkan perkembangan pasar dalam nilai tukar yuan Tiongkok terhadap dolar AS.

Tingkat paritas tengah yuan terhadap dolar AS didasarkan pada rata-rata tertimbang dari harga yang ditawarkan oleh pelaku pasar sebelum pembukaan pasar setiap hari kerja dan juga mengacu pada tingkat penutupan pada hari sebelumnya, dalam hubungannya dengan kondisi penawaran dan permintaan serta pergerakan mata uang utama.(ant/hrb)

http://id.beritasatu.com/international/yuan-tiongkok-menguat-jadi-63613-terhadap-dolar/128590
Sumber : INVESTOR DAILY

TOKYO — China’s real gross domestic product growth likely came to only 5% or so in the April-June quarter, well below the 7% shown in official data, according to the Japan Center for Economic Research.

The think tank looked at railway freight, electric power generation and growth in bank lending. These indicators, reportedly used by Premier Li Keqiang for economic analysis while he was Communist Party chief in Liaoning Province, are considered by many to provide a more accurate picture of China’s real economy than do official statistics.

An index composed of these three indicators put China’s real GDP growth at 4.8% to 6.5%, below the 7% reported by China’s statistics bureau. Railway freight declined about 10% on the year and growth in power generation slackened, dragging down the calculated economic growth rate.

The think tank’s estimate had not differed significantly from the government’s GDP growth data until around summer 2013, when it came in below the official figure. The gap has been widening since.

President Xi Jinping has repeatedly expressed confidence that China can achieve the government’s growth target of around 7%. Financial markets increasingly believe the economy has slowed more than expected and suspect that Beijing may be fudging the numbers.

(Nikkei)

TOKYO — China is still reeling from its own “Black Monday.” The Nikkei Asian Review spoke with Olivier d’Assier, Asia-Pacific managing director at Axioma, a U.S. provider of risk management tools, about the economic and political consequences of the market chaos in the world’s second-largest economy.D’Assier is former president of Barra Japan and former senior vice president of Nikko Securities.Q: President Xi Jinping has talked about a “shared destiny” between China and its neighbors, in which they can rise together economically. But this week, China dragged down all its neighbors with it. What is happening?A: When the country is doing well, it talks about external ambitions. When the economy goes bad, everybody looks inward. Just like a company might close down a factory in Malaysia, a central bank would take measures to protect the domestic market. Central banks act for their country, not for the global good.Just like the U.S. Federal Reserve did in the “taper tantrum,” and just like the Swiss National Bank scrapped its cap on the franc earlier this year, the People’s Bank of China acted like the national bank that it is. It is not a global bank. They cannot be blamed for the devaluation of their currency.  Q: But markets around the world have been affected.A: China’s impact on the global economy is through the commodity market, not the consumer market. Therefore, China, the emerging markets and commodity-producing markets that sell to them — such as Australia — have been hurt. They do not have very good fundamentals. But for the rest of the world, this [market slide] seems more technically driven and sentiment-driven, rather than [related to] fundamentals. The fear that you “must sell” has driven valuations down very rapidly and in an undisciplined, indiscriminate fashion.For instance, there should not be a correlation between airline stocks and oil company stocks. When oil-related stocks go up, airline stocks should come down. Similarly, stocks for beer companies and tobacco companies should not be correlated with pharmaceutical stocks. This is mispricing. In a six-to-12-month horizon, this mispricing will be fixed. There will be a lot of bargain hunting over the next few days.The problem for fund managers is that the risk has gone up. When the CBOE Volatility Index, or VIX, goes over a certain level, they are mandated by their clients to sell. Although they can explain to their clients that there is a lot of mispricing and there is an opportunity to gain, many clients, such as pension funds, would say that the risk is too high and that they prefer that you sell. People get scared.On Monday, the selling was indiscriminate across the board. On Tuesday, however, some airline stocks went up in Tokyo due to the lower oil prices. So there is already some economic sense kicking back in.Q: What will happen in China?

 

A: You have to remember that the Chinese invest only 10% of their savings into the stock market, so this is not going to put them on the streets. People there tend to put much more of their savings into real estate, so that is a bigger issue. And real estate prices are stabilizing and in fact are beginning to rise again.Today, the power of the Chinese government is concentrated in the hands of seven people, the standing committee of the Politburo. The one thing they worry about is losing legitimacy at home. Both the stock market turmoil and the explosions around the country have hurt their legitimacy to rule. Right now, they are prepared to do what it takes to gain back the trust of the people. So the world should treat China like a bear. Don’t poke the wounded bear. Don’t visit Yasukuni Shrine (honoring Japan’s war dead) this week because China would jump at it. They would love to use Japan to gain back their legitimacy.

Nobody can ignore China because their economy is intertwined with the region. But you have to be smart in the way you deal with them. Offer assistance. Show that you are a friend in a time of need.

Interviewed by Nikkei staff writer Ken Moriyasu

A: You have to remember that the Chinese invest only 10% of their savings into the stock market, so this is not going to put them on the streets. People there tend to put much more of their savings into real estate, so that is a bigger issue. And real estate prices are stabilizing and in fact are beginning to rise again.

Today, the power of the Chinese government is concentrated in the hands of seven people, the standing committee of the Politburo. The one thing they worry about is losing legitimacy at home. Both the stock market turmoil and the explosions around the country have hurt their legitimacy to rule. Right now, they are prepared to do what it takes to gain back the trust of the people. So the world should treat China like a bear. Don’t poke the wounded bear. Don’t visit Yasukuni Shrine (honoring Japan’s war dead) this week because China would jump at it. They would love to use Japan to gain back their legitimacy.

Nobody can ignore China because their economy is intertwined with the region. But you have to be smart in the way you deal with them. Offer assistance. Show that you are a friend in a time of need.

Interviewed by Nikkei staff writer Ken Moriyasu

nikkei: The most shocking thing about the world’s reaction to China’s decision to devalue the yuan was that anyone should have been surprised. For those who have watched China’s deteriorating economic growth since late 2014 and the ineffectiveness of monetary easing by the People’s Bank of China, the country’s central bank, currency devaluation appeared to be not only logical, but also inevitable.

Since recording its last double-digit rate of 10.4% in 2010, China’s economic growth has slowed by 3 percentage points over four years to 7.4% in 2014. In response, Chinese policymakers injected massive amounts of credit into the economy. Although estimates vary, total credit growth from 2011 to 2014 probably equaled 100% of Chinese gross domestic product, raising the debt-to-GDP ratio to around 280% at the end of 2014, according to McKinsey, the business consultancy.

Undeterred by the prospect of creating a financial crisis, the Chinese government continued to double down on monetary easing. Since last November, the PBOC has cut interest rates four times by a total of 115 basis points and lowered the reserve ratio (the amount of cash banks are required to hold) three times by 150 basis points.

This injection of new credit did not do much to revive China’s investment growth, but it did help inflate a gigantic stock market bubble that temporarily created a mirage of prosperity.

Unfortunately, the bubble started to collapse in mid-June, forcing Beijing to launch an aggressive and hugely expensive rescue operation to prevent share prices crashing. Meanwhile, the economy deteriorated further. In July, Chinese exports fell 8.3% while its purchasing managers index reading was 47.8%, the lowest in two years.

Beijing, Sept 28, 2015 (AFP)
Profits at China’s major industrial companies saw their biggest declines in four years last month, official data showed Monday, the latest sign of weakness in the world’s second-largest economy.

The figures came after a string of poor data showing the slowing pace of the traditional drivers of China’s growth sent shockwaves through markets worldwide.

Profits at a range of large firms declined by almost nine percent last month compared to the same period in 2014, the country’s statistics office said.

The profit falls at a range of companies with annual revenues of more than 20 million yuan were the biggest in about four years, Bloomberg News said.

“Market demand for industrial products was rather weak,” said He Ping, an analyst at China’s National Bureau of Statistics.

Months of declines in China’s stock markets have caused “the boost of return on investment to profit to wane sharply”, He added.

China’s economy expanded 7.3 percent last year, the weakest pace in almost 25 years.

The government has vowed to rebalance the economy away from reliance on exports and government investment towards domestic consumption as a driver of growth.

The industrial profit figures exclude firms in China’s service sector, which analysts say will increase in importance under such a rebalancing.

But Xu Yating, an economist with IHS Global Insight, warned that the dent in industrial profit could broaden to affect consumer goods makers.

“The headline profit growth is unlikely to improve in the short term and the downstream sectors will be affected in the long-run if China’s economic growth continues to slide and drag on domestic consumption,” Xu said in a report.

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<org idsrc=”isin” value=”US4517341073″>IHS Global Insight</org>

Currency wars and the threat of deflation

Downward pressure on prices signals dangers for the world economy

aljazeera

August 19, 2015 2:00AM ET

The price at which you can trade American dollars for foreign currencies may seem abstract, but events unfolding right now make it important to your future income, whether you have a job and the direction of the world economy in the next few years.

Around the globe, we are seeing strong downward pressure on prices, especially for commodities, prompting some governments to make their currency cheaper relative to the dollar. That suggests we may be entering a period of deflation, last experienced in a serious way in the U.S. in the Great Depression of the 1930s and the late 1800s. A deflationary spiral would represent a serious threat to the global economy.

Currency war

Let’s look at the currency fight. To bolster its exports, and thus jobs, Beijing last week cut the price of the yuan, relative to the dollar, by about 4 percent.

More than a fifth of American trade is with China, so the relative price of the yuan and dollar matters a lot to both countries. A cheaper yuan helps China export more manufactured goods, because Americans (and others) can buy them at lower cost. This also means it will cost the Chinese more to buy American products, so fewer will be sold.

In June China sold $1 billion per day more to the U.S. than it purchased. If the yuan falls 10 percent it, will make Chinese goods so much cheaper that our trade deficit with China will likely increase by about $66 billion annually. That translates into a likely loss of 190,000 to 640,000 American jobs, according to the Economic Policy Institute.

Since 2000 the U.S. has lost more than 5 million manufacturing jobs, the majority of them to China.

The U.S. could stanch this by buying yuan for, say, 5 to the dollar. At that price currency traders would be hunting for every Chinese coin stuck between couch cushions.

Chinese leaders would not take well to this and would, in turn, come up with their own responses to mitigate the effect of such a currency war because their interest is fixed on China’s long march to becoming the next superpower.

But it’s not just China that is devaluing its currency so it can lower the price of exports. The South Korean won, Thai baht and Malaysian ringgit have all come down in recent days and the Vietnamese dong is sure to follow as these countries try to make their exports cheaper and protect their manufacturing jobs. The Australian dollar, which floats freely because it is not managed by the government, also fell in the markets.

All this makes the dollar relatively stronger, which reduces American exports and manufacturing jobs.

For the U.S. the stronger dollar will also put even more downward pressure on wages as manufacturers try to find ways to make products competitive and overcome the stronger dollar. That would in turn worsen the already weak spending capacity of most Americans, adding to deflationary pressures as sellers trim the prices of goods and services.

Dollar

research.stlouisfed.org

Another way to make the dollar cheaper is by lowering interest rates — except that they are already so low. The effective Federal Funds rate is a tiny fraction of one percent, 0.13 percent to be precise. The discount rate, what the Fed charges banks for overnight loans to smooth cash flows, has been at 0.75 percent since 2010, down from 5.75 percent in early 2001.

The Federal Reserve keeps hinting it will abandon its zero-interest-rate policy as early as this fall. But lifting interest rates will make the dollar even more attractive as a safe storehouse of cash. So higher interest mean an even stronger dollar as more money flows into American debt securities, which means fewer American exports and more lost jobs and that, in turn, means pressure on sellers to lower prices to avoid being stuck with unsold goods and services. It’s a vicious cycle we want to avoid.

The falls in prices around the world raise the specter of deflation.

Loss of purchasing power

Meanwhile commodity prices around the world have fallen, an indication of an economic slowdown or even the start of a contraction, as Japan just reported. This especially hits the Brazilian economy, the world’s seventh largest, since it relies heavily on exporting iron ore, petroleum and other commodities to China, for which it will be relatively less.

Oil may fall to under $20 a barrel from its July 2008 high of $146, according to Barron’s, the weekly magazine for individuals who trade stocks. Oil traded at about $48 last week. At $20, it would be a short-term disaster for oil-field towns, where the falling price has already resulted in fewer drilling rigs, shutting some operating wells and fewer support jobs.

The falls in prices around the world raise the specter of deflation. The underlying global problem is that while profits have soared and corporations hold vast hoards of cash, few workers worldwide are getting real pay raises and many have seen their incomes fall in real terms. Their lack of purchasing power has lowered aggregate demand.

My analysis of new IRS data shows that, adjusted for inflation, the bottom half of Americans reported average total incomes (excluding welfare benefits like food stamps) of just $14,775 in 2012, down 18 percent from 2003.

Most people’s income derives from work. When pay is stagnant the capacity of people to buy more goods and services also must be flat unless they go into debt.  One way we have seen this in the U.S. is that the average age of cars on the road has increased from 8.4 years in 1995 to 11.4 years in 2014. We are slowly becoming less well off.

China faces similar problems. Angst among its newly created urban classes, who were sold on a bigger economic future through capitalism but feel the sting of rising prices and small wage increases, threatens party control.

Cheap foreign currencies convey some benefits. The American dollar is worth about $1.31 in Canada, making vacations and shopping there very attractive to those of us who live near the border. Airfares are even better deal. I was about to pay $1,452 in airfare to speak at the 2015 Global Investigative Journalism Conference in Norway when I looked up airfares out of Toronto. I paid just $695 and get to have dinner with a daughter who lives in Canada. Had I waited a month my airfare would have been just $515.

The danger of deflation

That price drop points to the problem with a general deflation, in which the overall prices of goods and services fall.  People tend to delay purchases if they believe they can get a bargain in the future. Think about the $180, or 26 percent, I could have saved on airfare by waiting a few weeks and expand it to everything all of us buy.

The problem is that without constant spending, the economy collapses. Money circulates just like the blood in your body — when the heart stops so does everything else.

Economists generally argue that a broad deflation is a prospect far worse than inflation and much harder to solve. However one research paper argued that the deflation of the late 1800s — an era, like ours, of rapid technological change — did more long term good than damage, though for many the short-term economic pain was intense.

Americans since World War II have become accustomed to thinking that delaying purchases means paying more, because of inflation. But with deflation the opposite takes place: Because things will cost less tomorrow, next week or next month, people want to hold cash and postpone purchases. (For people on fixed incomes deflation would be great; they could buy more and more goods and services because of falling prices.)

We need adapt our thinking to the emerging economic conditions of the 21st Century, in which flat prices or even a deflation threatens our prosperity. Without the incentive of rising prices brought by inflation, we risk falling into a vicious cycle of economic decline by deferring the purchases that drive the economy and the investments in education, infrastructure and basic research and undergird it. That would be a tragic mistake.

David Cay Johnston, an investigative reporter who won a Pulitzer Prize while at The New York Times, teaches business, tax and property law of the ancient world at the Syracuse University College of Law. He is the best-selling author of “Perfectly Legal,” “Free Lunch” and “The Fine Print” and the editor of the new anthology “Divided: The Perils of Our Growing Inequality.”

The views expressed in this article are the author’s own and do not necessarily reflect Al Jazeera America’s editorial policy.

BUENOS AIRES, Sept. 24 (Xinhua) — If the Chinese renminbi (RMB) became an international reserve currency, it would facilitate trade and investment in Latin America, said Argentine expert Matias Carugati.

Carugati, head economist of a consultancy Management & Fit, told Xinhua in an interview that it would have “concrete, long-term benefits” if the RMB was a reserve currency because it could ease trade and investment with China.

In 2014, direct investment from China to Latin America totaled 98.9 billion U.S. dollars, according to the Chinese Ministry of Commerce.

Last Friday the People’s Bank of China authorized the Industrial and Commercial Bank of China to act as a clearing bank for RMB transactions in Argentina.

Carugati said this move made the RMB closer to a reserve currency.

“As more such agreements are signed with countries and regions around the world, the RMB will become more and more influential and the International Monetary Fund will accept it some day in its basket of reserve currencies,” he added.

BEIJING, Sept. 23 (Xinhua) — While the latest manufacturing activity data points to lingering weakness, economists have been quick to reassure the market that the Chinese economy remains on course to achieve its annual growth target.

On Wednesday, the Caixin flash China general manufacturing PMI, a preliminary gauge of factory activity, plunged to a 78-month low of 47.0 in September from 47.3 in August. A figure below 50 indicates contraction.

With exports, investment and manufacturing all gearing down, the heady days of breakneck, hectic expansion are a thing of the past. The economy posted 7-percent growth in the first half. While this is the slowest pace in nearly a quarter of a century, it is too early to say the economy is veering off course.

It is not all doom and gloom, however, as 7-percent growth is within the targeted range. Further, signs of mild recovery and the effect of reform measures will support the economy in the second half (H2) of 2015, many economists believe.

Certain economic indicators are showing signs of picking up. China’s value-added industrial output expanded 6.1 percent year on year in August, up slightly from 6 percent in July. The same month, total-power use rebounded from a drop of 1.3 percent in July to an increase of 1.9 percent year on year.

This gradual improvement in power use shows that the economy is still holding steady, said Shan Baoguo from the State Grid Energy Research Institute.

Although traditional manufacturing slowed down markedly, new industries such as robotics, electric vehicles and smart devices have seen rapid growth this year, said Niu Li, an economist with the State Information Center.

“The fundamentals for economic stability have not changed,” said Ning Jizhe, deputy head of the National Development and Reform Commission, the country’s top economic planner.

China has maintained a medium-high growth rate and its restructuring and upgrading drive continues to make progress, he commented.

To shore up growth, the government has reduced interest rates four times this year, cranked up fiscal spending, cut fees and taxes, and rolled out major projects to boost investment and consumption.

Red tape has been slashed for small businesses and innovators, and private and foreign investors are benefiting from expanded market access.

The effect of these measures will become more apparent in H2, helping the economy and, with the base effect taken into account, will ensure the annual GDP growth target, of around 7 percent, is achieved, Niu forecast.

Michael Menhart, chief economist of German reinsurance company Munich Re Group, has faith in China realizing its annual growth target, assuring observers that there is no reason to panic.

The country’s top brass have projected confidence, too. “The Chinese economy is under a downward pressure…China has the capacity and is in the position to maintain a medium-high growth in the years to come,” President Xi Jinping said in a written interview with the Wall Street Journal published on Tuesday.

Xi said, to understand China’s economy, one needs to take a longer view. “If you liken it to a large ship on the sea, the question you ask is whether it is sailing in the right direction, does it have sufficient engine power and energy to stay long.”

“Any ship, however large, may occasionally get unstable sailing on the high sea,” Xi said.

There remains huge growth potentials in China thanks to substantial domestic demand, and ongoing urbanization and industrialization, according to Wang Baoan, head of the National Bureau of Statistics.

Reforms in areas like government administration, market access and state-owned enterprises will help tap the economic potential, said Cai Fang, vice president of the Chinese Academy of Social Sciences.

“Whatever happens, China will stay strongly committed to deepening its reform on all fronts while opening still wider to the outside world,” Xi said.

With a plan to overhaul state-owned enterprises released earlier this month, and confirmation that more businesses will be allowed to accept foreign investment from 2018, China looks on course to navigate the choppy waters of structural transformation and economic growth.

INILAHCOM, Beijing – Tingkat paritas tengah nilai tukar mata uang China renminbi atau yuan, menguat 10 basis poin menjadi 6,3709 terhadap dolar AS, Senin (14/09/2015). Demikian menurut Sistem Perdagangan Valuta Asing China.

Di pasar spot valuta asing China, yuan diperbolehkan untuk naik atau turun sebesar dua persen dari tingkat paritas tengahnya setiap hari perdagangan. Bank sentral China, People’s Bank of China (PBoC), mereformasi sistem pembentukan nilai tukar pada 11 Agustus menjadi lebih mencerminkan perkembangan pasar dalam nilai tukar yuan China terhadap dolar AS.

Tingkat paritas tengah yuan terhadap dolar AS didasarkan pada rata-rata tertimbang dari harga yang ditawarkan oleh pelaku pasar sebelum pembukaan pasar setiap hari kerja dan juga mengacu pada tingkat penutupan pada hari sebelumnya, dalam hubungannya dengan kondisi penawaran dan permintaan serta pergerakan mata uang utama. [tar]
– See more at: http://pasarmodal.inilah.com/read/detail/2237308/yuan-china-menguat-10-poin-terhadap-dolar-as#sthash.CkBSK2Vi.dpuf

forbes: Out of the “currency wars” of the 1930s, and then World War II, came a shared dream among the non-communist states: to establish a stable economic environment for business and trade. Representatives from forty-four countries met at the MountWashington Hotel in Bretton Woods, New Hampshire, and recreated the world gold standard system.

The U.S. dollar was officially linked to gold at $35/ounce, its gold parity since 1934. Other currencies were linked to the dollar at fixed exchange rates, which effectively meant that they were linked to gold as well. The Japanese yen was 360/dollar, year after year. (360*35=12,600/oz.) The German mark was 4.20/dollar.

In June of this year, former Federal Reserve chairman Paul Volcker spoke at the annual meeting of the Bretton Woods Committee, and pined for the world in which he grew up and began his career.

Volcker was under-secretary of the Treasury for international monetary affairs from 1969 to 1974. The U.S. ended the Bretton Woods’ system’s official link to gold in 1971, and the system’s final dissolution was in the spring of 1973.

That would give you quite a perspective on the evolution of things since then. His conclusions?

“By now I think we can agree that the absence of an official, rules-based cooperatively managed, monetary system has not been a great success. In fact, international financial crises seem at least as frequent and more destructive in impeding economic stability and growth. …

That is all a long introduction to a plea – a plea for attention to the need for developing an international monetary and financial system worthy of our time.”

The rules of the “rules-based” Bretton Woods system were clear: the dollar was linked to gold at $35/oz., and other currencies were linked to the dollar, thus effectively linking them to gold as well.

If it’s that simple, and the results were good – the Bretton Woods era of the 1950s and 1960s was probably the most prosperous of the 20th century for the United States – then why not just recreate it?

Alas, the Bretton Woods system also had many problems – problems that were inherent in its creation.

The proper way to operate a gold standard system, and the proper way to institute fixed exchange rates with other currencies, is through what amounts to a currency board-type system. The daily operation of the system is automatic. There is no central bank policy board, interest rate policy, or anything of that sort. We have many currency boards in use today, and they work fine, as long as the proper operating principles are adhered to.

These currency board systems allow unimpeded foreign trade and capital flows, with no problems whatsoever.

But, that is not what the organizers at the Bretton Woods conference wanted. The idea of “central planning” of an economy was popular. The conference was held during wartime, when in fact even the U.S. economy was organized along lines not so much different than the Soviet system.

Rather, governments wanted to also be able to “manage” their economies through what amounts to funny-money manipulation – interest rate targets, monetary or credit growth targets, unemployment targets, trade balances, or other such things.

These two impossibly contradictory goals could only be sustained with heavy capital controls, and even then there were periodic currency devaluations.  The British pound, once the world’s beacon of currency stability, was devalued in 1949 and 1967. The French franc was devalued twice in 1948, twice again in 1949, and again in 1957, 1958, 1960, and 1969.

The U.S. was playing the same game – trying to reconcile a “domestic monetary policy” of funny-money manipulation with an “external monetary policy” of fixed exchange rates — and, just as had been the case repeatedly in Britain and France, got to the point where it had to make a decision. Either the U.S. had to give up its funny-money ambitions, and return to the stable-currency discipline implied by the gold standard parity of $35/oz., or it would have to devalue.

Nixon devalued. At first, he wanted a devaluation like Britain or France, or the U.S. in 1933 – to re-establish the dollar’s gold parity at a lower value. In the Smithsonian Agreement of December 1971, only four months after the devaluation, the dollar’s new gold parity was supposed to be $38/oz. But, the Nixonites didn’t want to abide by the necessary gold-standard operating principles, at $35/oz., $38/oz., or at any gold parity. Fed chief Arthur Burns’ printing press was Nixon’s 1972 re-election strategy (it worked). In effect, the dollar had become a floating currency.

What a mess!

Thus, if we are going to meet again at a mountain resort hotel and build a new world monetary system (I suggest Davos), it would be good to review the failures – and successes – of the past.

First, the successes: the Bretton Woods gold standard system did indeed provide the monetary foundation for peace and prosperity throughout the world, for as long as it lasted. This was a bountiful time, for all levels of society.

Stable money works.

Second, the failures: the notion of combining a “domestic monetary policy” of funny-money manipulation with an “external monetary policy” of a gold parity or another fixed-value system was a total failure, even with the imposition of quite a lot of capital controls. This impossible contradiction led to the breakdown of the system in a brief 27 years, in the midst of peace and prosperity.

So, don’t do that.

Third, the construction of the Bretton Woods system, with its extreme reliance on U.S. dollar “reserve currency” assets instead of a direct link with gold bullion for currencies worldwide, was needlessly fragile. Although Britain and France devalued without any major repercussions beyond their borders, when the U.S. floated the “reserve currency,” the entire system blew up.

It would have been better for each country to have an independent link with gold bullion, and not be dependent on any “reserve currency.” This is much more robust, and has no particular difficulties.

Although I think most mainstream academics are still rather confused by the Bretton Woods era (as were economists who lived during that time), these basic problems are nevertheless well-recognized.

Lewis Lehrman was a member of the Congressional Gold Standard Commission of 1981, and co-author of the 1982 book A Case for Gold with co-commissioner Ron Paul. Although perhaps best known for his stint as the president of Rite Aid RAD +0.00% until 1977, he was also a managing director of Morgan Stanley during the 1980s.

More recently, he summed up his proposals in the 2012 book The True Gold Standard. The title continues: “A Monetary Reform Plan Without Official Reserve Currencies.”

The True Gold Standard actually contains a proposal for a U.S.-led international conference rather like the one at Bretton Woods. However, Lehrman’s proposal eliminates the excessive reliance on “reserve currency” assets such as U.S. dollar-based debt, and proposes a direct link to gold for participants, as was more often the case pre-1913 (although there were reserve-currency-based systems then too).

Lehrman’s proposal also includes a provision for “redeemability” of dollar base money into gold coin and bullion, and vice versa, on demand for all dollar users. This is a basic element of contemporary currency board systems, and also of historic gold standard systems.

The Bretton Woods system had it in the form of bullion redeemability for foreign central banks at the London gold market. However, gold bullion and coins had been made illegal for U.S. citizens to hold beginning in 1933, which continued to 1974. This was another major flaw in the Bretton Woods system, not only because it eliminated the basic operating mechanism of historic gold standard systems (redeemability), but because even the idea that the system was, fundamentally, a gold-based arrangement became little understood. This was a major political cause of its eventual breakdown.

With a focus on redeemability as a basic operating mechanism of the system, Lehrman’s proposal would avoid the basic contradiction that eventually blew up Bretton Woods: trying to combine both a Classical stable-money and Mercantilist funny-money approach in one ugly disaster.

We could have another Bretton Woods-like conference, followed by another two decades – better yet, two centuries – of peace and economic abundance.

But, we better understand what we’re going to talk about once we get there.

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bloomberg: China’s management of the world’s second-largest economy hasn’t gone swimmingly of late, but authorities have succeeded in one vital though little-noticed mission. They’ve closed the gap between the market value of the yuan and its official daily value, known as the “fixing.”

Matching the fixing of the Chinese currency with its market rate is an essential step before the International Monetary Fund will consider making the yuan one of its reserve currencies, along with the U.S. dollar, the Japanese yen, the British pound, and the euro, said Marc Chandler, a senior vice president and head of currency for Brown Brothers Harriman in New York. Raising the yuan’s profile remains a priority for the Chinese government, even during the current market turmoil. In its bid to become a world financial power, Beijing is playing a long game.

This chart shows that late in 2014 a gap began to open between the market rate of the yuan and the fixing, which is announced daily by a branch of the People’s Bank of China, the nation’s central bank. That worried Chinese authorities, because according to IMF rules the price set in the fixing is supposed to be the one at which market transactions can and do occur. It wasn’t.

 postYUANdeval_fixing 100915

In the chart, the upper line is the market rate for the yuan; it’s expressed in yuan per dollar, so the higher the line, the weaker the yuan. The lower line is the daily fixing.

The chart shows that the yuan was weaker than the fixing—that is, weaker than the Chinese government wanted it to be. The gap was never big, always inside the plus or minus 2 percent band within which the government allowed the yuan to fluctuate daily.

Then came Aug. 11, when China abruptly changed the fixing, weakening the yuan by about 1.8 percent. The move seems to have been more an acknowledgment of the yen’s weakness in the market than a bid to increase China’s competitiveness. But currency traders, guessing that Beijing would weaken the yuan more to stimulate exports, pushed the rate even lower.

Chinese authorities didn’t try to hold the line with the fixing. Instead, they let the official rate follow the market rate precisely. If they had fought the market by setting a stronger fixing, they surely would have lost, and damaged the nation’s bid to make the yuan a reserve currency.

That may not look like a big deal to Americans, who are used to a floating currency. In Chicago, Chandler noted, currency futures are traded right next to livestock futures. The Chinese, in contrast, have a tradition of a highly managed currency. “Most countries don’t accept in principle that currencies should be traded like bacon,” Chandler said.

“Nobody knows officially how China gets to its fixing. It’s still a black box. It says it takes prices from many banks, more than a dozen, including foreign banks,” but there seem to be other considerations at work, he said. “My sense is that they’ve engineered this so it looks right. Now that it looks right, they’ll engineer the substance behind it.”

 

bloomberg: What happens in Beijing doesn’t stay in Beijing.

The high costs associated with maintaining the yuan’s peg to the U.S. dollar amid weakening economic data prompted a startling currency devaluation by China on Aug 11, 2015. Since then, the move has come to be viewed as the proximate cause for the upheavalin financial markets over the past month, and led to devaluations from other nations with fixed exchange rates.

Capital outflows have been Chinese policymakers’ biggest headache. These waves of money leaving the world’s second-largest economy are a source of downward pressure on the yuan and have a deleterious effect on domestic liquidity – the last thing a nation that’s enjoyed an extended run of buoyant, credit-fueled growth needs.

Because China’s delicate balancing act isn’t a permanent solution, market participants are wondering how – and when – it might end.

Analysts at Deutsche Bank, Barclays and Societe Generale estimated last week that the People’s Bank of China depleted its foreign reserves by between $100 to $200 billion in August in order to stabilize the yuan after the shock devaluation prompted traders to see how low the exchange rate could be pushed and capital outflows, in all likelihood, did not abate. As such, the recently stability in the exchange rate has been a façade – and an expensive one at that.

“The PBoC appeared to be heavily active in the spot market after the currency regime change on 11 August in order to stabilize the yuan,” wrote Societe Generale China economist Wei Yao.“Onshore yuan trading volume almost doubled in the 15 trading days following 11 August, compared to the previous 20 trading sessions and the year to date average.”

Societe Generale

Meanwhile, Barclays’ rates and foreign exchange team estimates that the People’s Bank of China would have to cut the reserve requirement ratio by a minimum of 40 basis points per month just to offset negative effects on liquidity from its foreign exchange interventions, given the current pace of capital outflows.

This fragile equilibrium, however, could endure for longer than you might expect.

Even after the drawdown in August, Societe Generale’s Yao estimates that the People’s Bank of China has a hefty $3.5 trillion in foreign reserves. According to official data released on Monday, China’s currency hoard declined by a less-than-feared but still significant $93.9 billion in August, leaving it with $3.56 trillion remaining.

Chinese policymakers likely desire to maintain a sizable buffer in the form of foreign reserves, so Yao thinks they would only be willing to sell $1 trillion of their assets in order to defend the yuan. This suggests that China could probably maintain its current exchange-rate management tactics for many months, but not necessarily years.

Chinese policymakers can try to stabilize their exchange rate through actions other than direct intervention. Societe Generale’s Yao has suggested that the imposition of more capital controls could prevent more funds from leaving the country. On the other hand, Deutsche Bank Chief China Economist Zhiwei Zhang points out that the government could open up financial markets to more participants, like insurance companies, in order to induce flows into the country.

Mercifully for China, the storm appears to be abating, for now.

“On the first two trading days in September, the [dollar-yuan] rate actually had sizable appreciations with shrinking daily trading volumes,” observed Zhang.

Deutsche Bank

But going forward, it’s only a matter of when and how much the yuan will fall, according to the analysts.

Barclays and Societe Generale are calling for the yuan to decline by 7 percent relative to the U.S. dollar by year-end, with Yao citing the futility of this “war of attrition against capital outflows.”

“[T]he longer that significant FX intervention takes place, such costs [in terms of foreign reserve depletion, tightening domestic liquidity, and the need to offset it] will increase, and likely only delaying, rather than reducing, expectations of further CNY depreciation,” added Barclays.

Deutsche Bank expects a much more modest depreciation for the duration of 2015. For now, Chinese policymakers will be content to watch how financial markets digest an interest rate hike from the Federal Reserve before making their next move, according to Zhang.

“We expect the government to keep the current arrangement for the rest of 2015, and monitor how international market reacts to rate hike in the U.S.,” he asserted. “It is unlikely that the People’s Bank of China attempts to repeat what it did on Aug. 11 before the U.S. rate hike.”

 

BEIJING, Aug. 29 (Xinhua) — The Ministry of Commerce (MOC) has defended China’s overhauling of its exchange rate formation mechanism, a move which has seen a significant drop in the Chinese yuan’s central parity rate against the U.S. dollar.

There has been concern in the international market over the connection between the yuan’s depreciation and China’s efforts to boost exports.

However, the MOC said in a statement late on Friday night that the drop, of 4.6 percent in three days after the adjustment on Aug. 11, was “a normal adjustment” and will have limited impact on foreign trade.

Since late last year, there had been a significant discrepancy between the yuan’s central parity rate and the spot trading rate. The new quotation regime of the central parity helped narrow the gap and allowed the market to play a bigger role in determining the yuan’s exchange rates, the statement said.

On Aug. 11, China’s central bank ordered that daily central parity quotes reported to the China Foreign Exchange Trade System before the market opens should be based on the closing rate of the inter-bank foreign exchange market the previous day, supply and demand, and price movement of major currencies.

After dipping 4.6 percent in the following three days, the yuan’s central parity against the dollar has since stabilized.

“Under a global value chain, there is a downstream and upstream industrial division and international trade within a single industry is very common. So the boosting effect on exports arising from a currency depreciation will be shared by various economies and thus weakened,” according to the MOC.

It said the impact of a one-off rate adjustment on Chinese exports will be limited because around half of it is accounted for by processing trade, in which products’ raw materials are imported to China and the finished products are re-exported after assembly.

There is no basis for continued depreciation of the yuan, and the exchange rate will be kept “basically stable at an adaptive and equilibrium level,” the statement also said.

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la-times: By James F. Peltz contact the reporterAsiaWall Street endured a wild ride today, with the Dow Jones industrial average closing with a loss of 588.47 points, or down about 3.6%.The drama followed volatility and major losses in markets worldwide as they responded to another big sell-off in China.The blue-chip industrials skidded as much as 1,089 points moments after the opening bell, then cut that loss dramatically to about 115 points before falling again.The average has dropped more than 9% in the last week and has lost about 12% from its record high of 18,312.39 set on May 19, which puts it in the so-called correction territory of a decline of 10% or more.Other key U.S. indexes also tumbled Monday. The broader Standard & Poor’s 500 index was down 77.66 points, or 3.9%, and the tech-laden Nasdaq composite index also was off 179.79, or 11.1%Chris Hardt, a financial advisor at Edward Jones, has been telling clients that Monday morning’s pullback is not unusual.“The market will pull back 10% about once a year on average,” he said. “This is a normal thing.”Long term, the market still looks strong, said Michael Kanigher, a UBS managing director and private wealth advisor in Los Angeles.“We’re in a volatile market, and these pullbacks are going to occur for reasons,” he said. “The reason today is China. Before, you could insert Greece and talk about the same problems. Right now, the market seems to be doing well, and definitely not on a path to a recession.”The Dow’s worst point drop for a full day was 777.68 points on Sept. 29, 2008, which amounted to a 6.98% drop. The average’s worst percentage decline for a full session was 22.6% on Oct. 19, 1987.Among the market’s leading stocks, Apple Inc. fell 2.5% to $103.12; and General Electric Co. lost 2.9%. Netflix Inc. plummeted 6.8% to $96.88. All had seesawed as they recovered from deeper intraday losses.Traders looking for a safer haven bid up Treasury bond prices, sending their yields sharply lower. The yield on the 10-year Treasury bond fell below 2% — to 1.96% — for the first time since April, but ended the day at 2%, down from 2.05%.
Dow performance still far from 2008 dropDow performance still far from 2008 dropU.S. and foreign stocks again followed a massive sell-off in China amid growing fears about China’s slowing economy and the ripple effect it could have on corporations worldwide that do business with China.China’s benchmark indicator, the Shanghai composite index, tumbled 8.5% on Monday, triggering the global sell-off. The Nikkei index in Japan skidded 4.6%, as did the Stoxx Europe 50 index in Europe. Major indexes also fell in Germany and Taiwan.Even with its loss this year, the Shanghai index remains 43% higher than it was a year ago.The sell-off occurred despite an announcement by China’s Cabinet on Sunday that authorities would allow pension funds managed by local governments to invest in the market, potentially providing a boost worth hundreds of billions of dollars.Chinese state media reported on Monday’s losses without commenting on government plans or policy — Xinhua, the state news service, ran a four-line story on the plunge, focusing on markets beyond the country’s borders.”Today’s stock market drops worldwide afford further evidence that the past decade has been China’s ‘Roaring ’20s’ — and that the chickens are now coming home to roost,” said Cornell Law School professor Robert Hockett, an expert in financial and monetary law.”China’s emerging middle class has taken on huge quantities of private debt in recent years to buy everything from real estate to stocks,” he said. “The result has been a sequence of classic credit-fueled asset price bubbles much like those experienced by the U.S. in the 1920s and early 2000s.”Now that asset prices have leveled off and reversed, millions of Chinese are faced with the prospect of owing more on their debts than their assets are worth — just like U.S. investors and homeowners before them.”Users of Sina Weibo, the country’s most popular microblog, voiced concerns that the rout would precipitate a global recession, similar to the 2008 financial crisis. “Is a global recession really coming?” wrote one user, Lilyyuncai. “Why shouldn’t the government adopt some measures to deal with this?”Analysts said the Chinese government’s heavy-handed response to midsummer turmoil in the country’s stock markets, followed by a surprise currency devaluation on Aug. 11, have shaken investor confidence in the ability of the country’s economic policymakers to mitigate a further downturn.Any protracted slowdown in China would have ripple effects around the world; global stocks have fallen by more than $5 trillion since mid-August, when the currency devaluation was announced.“This is very much the delayed hangover of the bursting bubble,” said Fraser Howie, coauthor of “Red Capitalism: The Fragile Financial Foundation of China’s Extraordinary Rise.”“Back seven weeks ago during the government intervention, when [the government] bought billions of dollars of shares, the market thought that it would get support to encourage buying. Now, there’s some clarity that the government isn’t always going to be there.”Twitter: @peltzlatimesL.A. Times staff writers Jonathan Kaiman in Beijing and Samantha Masunaga in Los Angeles contributed to this report.
Nikkei Asian Review- TOKYO — Uncertainty over the Chinese economy is deepening, with a string of economic figures, including those for investment, production, consumption and trade, all deteriorating.This has prompted the People’s Bank of China, the central bank, to devalue the Chinese currency, the yuan, against the dollar, sending shock waves through global markets.The big question now is: What is actually happening to the Chinese economy?Beijing has set a target of keeping the economy growing by around 7% on an inflation-adjusted basis. But changes in the real growth rate do not clearly reflect a turning point in the economy.In the April-June quarter, China’s economy grew 7% on the year in real terms — exactly the same as the target growth rate. In the same period of 2014, growth was 7.5%.

The growth figure for April-June 2015 makes it appear that the economy has been slowing only gradually in the past year or so. But changes in the nominal growth rate paint a completely different picture.

Nominal growth, or growth before adjusting for inflation, reflects economic conditions facing businesses and consumers more vividly than real growth.

After standing at 11.2% in the July-September quarter of 2013, China’s nominal growth rate started tumbling. It slowed to just 5.8% in the January-March quarter of 2015, well below the real growth rate of 7% for the same period.

It was the first time in six years that real growth exceeded nominal growth. If such a situation persists, it could raise concerns over possible deflation in the world’s second-largest economy.

China’s currency policy also reached a key milestone this past spring.

TADANORI YOSHIDA, Nikkei senior staff writer

     The central bank puts emphasis on the yuan’s effective exchange rate, which shows the currency’s total power. According to estimates by the Bank for International Settlements, the yuan’s real effective exchange rate surged by about 18 percentage points between May in 2014 and March this year.

But the sharp rise in the yuan’s real effective exchange rate stopped and the rate began to drop in April.

China’s surprise devaluation of the yuan against the dollar on Aug. 11 is in line with the central bank’s currency policy since spring. It is apparently aimed at sending a clear message at home and abroad that China has reversed the yuan’s rising trend.

Nominal growth exceeded real growth again in the April-June quarter due to such government measures as increasing permits for public works projects.

But the weakening of the Chinese economy shows no sign of stopping, with economic figures for July showing consumption growth losing steam and auto production slumping.

Mihoko Hosokawa, a researcher at Mizuho Bank (China), predicted that China “will do everything in its power to prevent any further economic slowdown” because it fears a possible rise in social unrest.

China will likely continue to pursue conventional stimulus measures, such as more lending by major banks and increased investment in railway, airport and other infrastructure projects — at least for a while.

Meanwhile, the pace of China’s economic reforms could slacken. The country faces the daunting challenge of consolidating industries larded with uncompetitive companies and excess facilities.

To be sure, such a winnowing process could make the employment situation worse. But shying away from doing so would delay progress in efforts to make the economy more efficient.

Beijing is under growing pressure to perform a delicate balancing act between shoring up the sluggish economy in the near term and ensuring stable economic growth in the medium- and long-term.

smh: Global markets tumble on China, growth fears

Date
August 21, 2015 – 7:49AM

 

World stock markets tumbled and Brent oil prices remained under pressure on Thursday as another slump in the equity market of China, the world’s No. 2 economy, stoked concerns about sluggish global growth.

Wall Street was also weighed down by a drop in finance stocks and fell for a third straight session as expectations cooled for a US interest rate hike in September, which also kept the dollar lower.

The declines in equities put the S&P 500 back into negative territory for the year. The Nasdaq suffered its biggest daily per centage drop since April 10, 2014.

Fears of slowing growth in China has spooked markets. Photo: Bloomberg

Locally, the futures are pointing to a 75-point at the drop for the ASX.

Stocks in China tumbled again, with both the Shanghai and Shenzhen markets down more than 3 per cent.

Investors have been concerned a weak currency and slowing economy may spur further capital outflows.

“The largest issue is certainly the fact that we don’t know how much the Chinese economy is slowing,” said Art Hogan, chief market strategist at Wunderlich Securities in New York.

Financials hit

In a broad selloff on Wall Street, in which each of the 10 major S&P sectors lost ground, financials dropped 2.1 per cent. The drop comes in the wake of minutes released Wednesday from the Federal Reserve’s July meeting, which cooled expectations the Fed will start to raise interest rates as early as September, the first such move in nearly a decade.

A 6-per cent drop in Disney to $US100.20 also weighed heavily. Bernstein downgraded the stock along with Time Warner , down 5 per cent to $US73.91, to lead media stocks lower, citing massive structural upheaval in the industry.

The Dow Jones industrial average fell 358.04 points, or 2.06 per cent, to 16,990.69, the S&P 500 lost 43.88 points, or 2.11 per cent, to 2,035.73 and the Nasdaq Composite dropped 141.56 points, or 2.82 per cent, to 4,877.49.

MSCI’s all-country world stock index lost 1.5 per cent after touching a 7-month low.

The Fed minutes showed officials in broad agreement that the US economy was nearing the point where interest rates should move higher. It also noted lagging inflation and that a weak global economy posed too big a risk to commit to a rate “liftoff.”

Broad declines

The FTSEuroFirst index of 300 leading European shares fell 1.9 per cent and Germany’s DAX fell 2.1 per cent to its lowest close since January. That put the DAX down about 7.8 per cent so far this month, its worst month in four years.

In Asia, MSCI’s broadest index of Asia-Pacific shares outside Japan shed 1.5 per cent to a two-year low, marking a fifth consecutive day of losses in what is its longest losing streak this year.

Benchmark 10-year notes were last up 16/32 in price to yield 2.0731 per cent from 2.50 per cent in mid-June.

The dollar shed 0.61 per cent to 96.028 against a basket of major currencies amid the diminished rate hike expectations, touching a 5-week low of 95.724.

US crude oil managing to bounce off its support level near $US40 a barrel and from a 6-1/2 year low of $US40.21 as the first hurricane of the 2015 Atlantic season sparked some concern. The contract settled up 0.8 per cent at $US41.14, while Brent crude settled down 1.2 per cent at $US46.62.

MSCI’s emerging market index set a near four-year low, having fallen 22 per cent from this year’s high hit in April.

Kazakhstan fired the latest salvo in an emerging market currency war, ditching a trading band on its currency, the tenge, which lost a quarter of its value.

Reuters

Fears of currency war overstated

China’s move last week to devalue the yuan has drawn much bad press, sparking talk of competitive devaluation, or currency wars. This is an overreaction. What the Chinese did was to bring the controlled yuan more in line with market forces.

The past week’s turmoil in global and especially Asian currency markets reflects investors’ and some politicians’ misunderstanding of the Chinese yuan devaluation. In some quarters, there has been an overreaction to the impact of the move.

What is happening is not indicative of an emerging markets “currency war”, as many have surmised. Instead, it was an intervention to let the yuan move in tandem with the market.

First, some background.

China’s currency has been tightly linked to the US dollar for many years, meaning that it rises when the dollar rises, and falls when the dollar falls.

In the past couple of years, the dollar has soared on the back of stronger economic growth in the United States than in its trading partners, and in anticipation of the US Fed’s long-promised interest-rate increase. Both these developments raise the relative returns to investments in US dollar assets, drawing capital away from other countries.

The strengthening US dollar means that other currencies have weakened against it and the dollar-pegged Chinese yuan.

In the stagnating Japanese and European economies, belated monetary stimulus in the form of government bond-buying or “quantitative easing” on top of near-zero interest rates, have had the effect of weakening the yen and euro, thus cheapening and increasing exports from Japan and Europe and restoring some economic growth there.

Since 2013, China has been experiencing slowing economic growth, in part because its policymakers seek to “rebalance” the now-middle-income economy away from past over-reliance on investment by state-owned enterprises (often into unproductive activities) and exports, towards more consumption which would increase the welfare of the Chinese people.

Slower growth in China means falling demand for and hence import of raw materials and energy from commodity-exporting countries like Canada, Australia, Brazil, Indonesia and many other developing economies. This further depresses the currencies of these countries, already suffering from an outflow of capital to the higher-growth, soon-to-be-higher- interest-rate US.

Taken together, these developments caused China’s currency to strengthen by some 30 per cent as other countries’ currencies weakened against the soaring US dollar to which the yuan was pegged.

In May this year, the International Monetary Fund (IMF) pronounced the yuan “no longer undervalued”. The yuan continued to rise even as Chinese growth slowed, capital flight increased, and most recently, its stock markets tumbled.

DEVALUATION TO KEEP PACE WITH THE MARKET

In these circumstances, the fact that the Chinese monetary authorities did not re-peg or devalue the increasingly overvalued yuan before last week, and by a greater percentage, is testimony to their political determination to keep the yuan strong as part of their hope to transform it into an international reserve currency like the dollar, euro, yen and pound sterling.

But part of this transformation also requires that the currency’s value be determined by market forces, rather than government fiat.

In recent weeks, market forces have been pushing the yuan down below its daily trading floor. If the yuan were freely floating like many other currencies, it would likely have drifted even further downward.

Bear in mind that the yuan doesn’t trade freely. It is pegged to the US dollar. The People’s Bank of China, the central bank, sets a daily target figure for the yuan and allows trading within a tight band of 2 per cent above or below it.

On Aug 11, the central bank set the target 1.9 per cent below the previous day’s level, the biggest one-day change within a decade. The yuan’s value fell correspondingly. On Aug 12, it set the rate another 1.6 per cent lower, sparking another round of devaluation.

The bank also changed the way the yuan’s target value is set, saying it will be more responsive to market forces, and be based on the previous day’s closing value.

Given the circumstances, the move last week was a response to market forces: the equivalent of loosening the screws to allow the yuan to float down in response to market forces, which was what happened.

The Chinese monetary authorities have argued that their move was in tandem with market forces, and the International Monetary Fund has validated this.

Another thing the Chinese authorities did was to intervene in the market to stem a further slide on the yuan after the devaluation. It did so by entering the market to buy yuan with some of their copious foreign exchange reserves.

In so doing, they were acting like many other countries with “managed float” regimes (including Singapore), where daily buying and selling of currencies is done to moderate exchange rate fluctuations.

OVERREACTION TO THE DEVALUATION

So why the outcry, particularly in the US, that China is “manipulating” its currency to gain an unfair competitive edge for its exports in world markets?

One reason is that we are once again in the “silly season” of US presidential election politics where China provides a convenient whipping boy for candidates anxious to show off their nationalist credentials.

But a more important reason is probably the lack of understanding on the part not only of politicians, but also of the public and even business leaders, of the complexities involved in currency movements.

First, the 2 to 3 per cent yuan depreciation is small, certainly against its prior 30 per cent appreciation. Second, a weaker currency does not automatically mean cheaper and more exports that would benefit China.

For one thing, exports usually include imported components (like raw materials), and the cost of those in domestic currency rises when the currency weakens.

For another, businesses which have borrowed abroad (for example, because of lower US dollar interest rates) are now faced with higher debt repayment burdens, which also raise their costs and shrink their margins. And, any stronger demand for exports could raise domestic inflation, especially where labour is scarce.

Many of China’s exports are complementary rather than competitive with those of other countries, being part of regionally or globally integrated manufacturing supply chains.

Just because the Chinese portion of what goes into exports are slightly cheaper due to a lower yuan, does not mean that Chinese exports will increase in volume greatly. Exports don’t just depend on relative prices. They depend also on foreign demand, which is in turn dependent on foreign income growth.

Will a weaker yuan – and stronger dollar – boost Chinese exports to the United States?

Consider that a stronger US dollar makes US exports more expensive abroad, and imports cheaper within the US. This hurts demand for US multinationals’ goods. A strong US dollar also means foreign profits translate into fewer US dollars when repatriated, hitting bottom lines. Meanwhile, US companies lose market share to European and Japanese competitors whose currencies, the euro and yen, are falling more than the yuan.

It is thus not at all clear that a weak yuan will result in a boost in Chinese exports to the United States, if US income growth cannot support that surge in demand.

In contrast, many US companies import parts and components from China, so they may even benefit as these get cheaper due to a weaker yuan. For some companies like car assemblers, strong growth in the US market has outweighed the negative effects of the strong dollar, just as slowing growth in China has cut demand for the products they manufacture there for the Chinese market.

SOUTH-EAST ASIA AND A WEAKER YUAN

South-east Asia is not as fortunate.

In this region, foreign exchange earnings from commodity exports have fallen due to slower Chinese demand in recent years (including from slower Chinese export growth partly from the strong yuan).

Their currencies weakened significantly before the yuan devaluation, due to outflows of capital responding to anticipated better investment returns in the US. Weaker currencies increased import and foreign debt repayment costs.

But the monetary authorities have been reluctant to raise interest rates to support currencies and reduce the risk of imported inflation, because this would further slow domestic growth.

A weaker yuan might also reduce Chinese investment in the region and divert labour-intensive export manufacturing back to China.

Going forward, the best outcome for the Chinese, US, South-east Asian and world economies is for China to continue to liberalise its financial system and currency as its officials have reiterated it is determined to, and for the US Fed to finally raise interest rates.

Both actions will reduce the uncertainty which is currently spooking investors and roiling markets. The Fed at least has been transparent about what it intends to do and why (but not when or at what pace).

The problem with China is the lack of trust by both domestic and foreign investors that the government will indeed continue to pursue necessary market- oriented economic reforms despite slowing growth and domestic political resistance.

Its recent role in both fuelling the stock market bubble (on the heels of prior credit and property bubbles), and intervening to prevent its deflation, has cast doubt on the extent to which “market fundamentals” will be allowed to determine the currency’s value as well.

Ironically, capital market actors base their “market-driven” investment decisions on governments’ policy credibility, which can only be earned by observed actions.

And that supposed “currency war”? Europe, Japan and other Asian countries did not engineer depreciation in their currencies to give their exports a competitive edge in global markets, though for some, that might have been an (intended or unintended) effect of domestic monetary stimulus, and for others, of US monetary tightening.

Given how delayed, and small, the yuan devaluation has been to date, and the long-term goal of a strong and stable currency, it is highly unlikely that China devalued to spur a currency war, or that other countries will deliberately imitate it.

Most already have floating currencies, and in this ever-more-integrated world economy, competitive devaluations will not only “beggar our neighbours”, but ourselves as well.

  • The writer is professor of strategy at the Stephen M. Ross School of Business, University of Michigan, in the United States.

BEIJING. Kebijakan bank sentral China menahan laju depresiasi nilai tukar yuan, diperkirakan kalangan ekonom bakal menggerus cadangan devisa negeri Tirai Bambu tersebut.

Menurut sejumlah ekonom yang disurvei Bloomberg, cadangan devisa China akan menyusut US$ 40 miliar per bulan akibat intervensi  People’s Bank of China (PBOC) di pasar keuangan negeri tersebut. PBOC diperkirakan bakal mengucurkan dana cukup besar untuk menahan depresiasi kurs yuan.

Sebagai konsekuensinya, hingga akhir tahun ini, cadangan devisa China diproyeksi akan menyusut menjadi US$ 3,45 triliun dari posisi pada akhir Juli lalu sebesar US$ 3,65 triliun.

Ken Peng, analis dari Citigroup Inc di Hong Kong menilai, sebagai negara dengan cadangan devisa terbesar di dunia, China akan mengucurkan banyak cadangan devisa untuk mencapai tujuannya tersebut. “Bank sentral China akan sering melakukan intervensi di pasar valuta asing dalam tiga bulan ke depan untuk menjaga stabilitas mata uang yuan,” ungkap Peng.

Kebijakan intervensi PBOC menahan depresiasi yuan tersebut bertujuan untuk membatasi hengkangnya modal asing. Pasalnya, lebih dari dua dekade, laju pertumbuhan ekonomi di Negeri Panda itu mengalami perlambatan. Bahkan, untuk mendukung kebijakan intervensi PBOC, cadangan devisa China telah tergerus hingga US$ 192 juta dalam tujuh bulan terakhir.

Survei Bloomberg juga menunjukkan, di sisa akhir tahun ini, nilai tukar yuan terhadap dollar Amerika Serikat (AS) akan melemah 1,6% menjadi 6,50 per dollar AS.

Pada pekan lalu, otoritas moneter China memborong yuan melalui bank agen untuk menstabilkan nilai tukar yuan. Kebijakan ini dilakukan setelah pada 11 Agustus yuan didevaluasi akibat ekonomi China masih tergelincir dalam dua dekade. Setelah kebijakan devaluasi, dalam lima hari terakhir, mata uang yuan melemah 2,9% menjadi 6,3947 per dollar AS. Pada Senin lalu (17/8), nilai tukar yuan diperdagangkan turun 0,05%.

Huang Wentao dan Zheng Lingyi, analis dari China Securities Co berpendapat, China akan terus mengeluarkan biaya yang besar untuk mempertahankan stabilitas nilai tukar yuan terhadap dollar AS. “Ini termasuk mengorbankan ekspor dan menggunakan cadangan devisa,” ujar Wentao.

 

Editor: Dikky Setiawan
SUMBER: BLOOMBERG

 

Shanghai -Semua orang punya mimpi buruk. Bagi investor global, mimpi buruk terbarunya adalah China. Kok bisa?

Bagi investor, kestabilan ekonomi adalah segala-galanya. Tidak perlu naik terlalu tinggi, tidak juga anjlok sangat dalam, yang penting stabil dan tumbuh secara perlahan.

Nah, kestabilan itu dirusak oleh Negeri Tirai Bambu, mulai dari pasar saham yang anjlok hingga pelemahan nilai tukar yuan terhadap dolar Amerika Serikat (AS) yang disengaja oleh the People’s Bank of China.

Situasi di China menjadi lebih menakutkan ketimbang, jatuhnya harga minyak, melonjaknya dolar AS, gejolak di Yunani, bahkan rencana naiknya suku bunga The Federal Reserve.

Pekan lalu, China sudah bikin geger gara-gara sengaja melemahkan yuan. Negara dengan ekonomi terbesar kedua itu ingin menaikkan daya saing ekspornya yang sedang melambat.

“Apakah mereka (China) tidak tahu apa yang sudah mereka lakukan? Sepertinya begitu, dan ini membuat investor di seluruh dunia mulai ketakutan,” ujar Ed Yardeni, President Direktur Yardeni Research dalam riset yang dibagikan kepada kliennya, seperti dikutip CNN, Rabu (18/8/2015).

Kemarin, mimpi buruk investor datang lagi. Indeks Komposit Shanghai terjun bebas hingga 6,2% dalam sehari.

(ang/ang)

The most shocking thing about the world’s reaction to China’s decision to devalue the yuan was that anyone should have been surprised. For those who have watched China’s deteriorating economic growth since late 2014 and the ineffectiveness of monetary easing by the People’s Bank of China, the country’s central bank, currency devaluation appeared to be not only logical, but also inevitable.

Since recording its last double-digit rate of 10.4% in 2010, China’s economic growth has slowed by 3 percentage points over four years to 7.4% in 2014. In response, Chinese policymakers injected massive amounts of credit into the economy. Although estimates vary, total credit growth from 2011 to 2014 probably equaled 100% of Chinese gross domestic product, raising the debt-to-GDP ratio to around 280% at the end of 2014, according to McKinsey, the business consultancy.

Undeterred by the prospect of creating a financial crisis, the Chinese government continued to double down on monetary easing. Since last November, the PBOC has cut interest rates four times by a total of 115 basis points and lowered the reserve ratio (the amount of cash banks are required to hold) three times by 150 basis points.

This injection of new credit did not do much to revive China’s investment growth, but it did help inflate a gigantic stock market bubble that temporarily created a mirage of prosperity.

Unfortunately, the bubble started to collapse in mid-June, forcing Beijing to launch an aggressive and hugely expensive rescue operation to prevent share prices crashing. Meanwhile, the economy deteriorated further. In July, Chinese exports fell 8.3% while its purchasing managers index reading was 47.8%, the lowest in two years.

 

Lessons

If we have learned anything about how Beijing deals with difficult economic challenges since the 2008 global financial crisis, it is about its leaders’ attitude of “whatever it takes” and “shoot first (ask questions later).” The decisive factor in any decision has always been maintaining economic growth.

To be fair to President Xi Jinping and Premier Li Keqiang, they inherited an economic mess in late 2012. A decade of prosperity fueled by explosive export growth, following China’s entry into the World Trade Organization and a resulting real estate and infrastructure investment boom, dampened appetite for reform and created an economy saddled with debt, a property bubble and immense manufacturing overcapacity.

After becoming head of the Communist Party in 2012, Xi knew that the party’s long-term survival and his own political fortune would rest on reviving growth through structural reforms. Exactly a year after his appointment, Xi launched an ambitious long-term blueprint for economic reforms.

Unfortunately, only modest reforms, mainly in the financial sector, have been implemented in the last two years. Besides being unfairly blamed for fueling the stock market bubble, the liberalization of interest rates and capital controls had no discernible positive impact on growth. Meanwhile, measures more urgently needed, but also more painful, such as financial deleveraging, closing “zombie” firms, and downsizing state-owned enterprises, were delayed or resisted.

As long as Xi enjoyed an extended political honeymoon as a result of his crackdown on official corruption, he did not have to worry too much about poor economic performance. But things have changed in recent months.

After tightening up and jailing many corrupt senior officials, known as “tigers,” Xi apparently is running out of easy targets. Like a military conflict, an anti-corruption campaign requires constant escalation to demonstrate the dominance of the victor.

Xi has become a victim of his own early success. Now he finds himself in a dilemma: to maintain credibility and political dominance, he needs to go after even bigger tigers. Given the rot at the top of China’s Communist Party, there are plenty of super tigers left to catch. But the political costs will be very high as Xi increasingly risks an open split with the most powerful factions in the party.

At the same time, the law of diminishing returns has set in. Ordinary people who have been cheering the fall of tigers and junior official “flies” are now gaining less satisfaction from the spectacles of formerly high-flying officials confessing their sins in court. It is nice to have a less corrupt government, but it would be even nicer to have a cleaner government that can also deliver economic prosperity.

With less than two and half years left in his first term, time is running out for Xi to demonstrate his capability as a strong leader who can both clean house and revive China’s sagging economic fortunes. If he fails to deliver real economic improvement in the next two years, Xi will have considerably less political capital in the fall of 2017, when the party convenes its 19th congress to decide whether to make him a lame duck by anointing his successor.

 

Pivotal event

The pivotal event, in retrospect, that influenced China’s decision to devalue was the rise and fall of the country’s stock market bubble. The bubble initially boosted confidence and, had it lasted, might have lifted short-term growth. But its untimely collapse forced Beijing to resort to desperate measures.

In the immediate aftermath of the bursting of the bubble, the Chinese government pumped more than one trillion yuan into the stock market to support overvalued equity prices, unnecessarily fearing that further market declines would trigger a runaway financial crisis that would further depress growth.

As Beijing had relied principally on the PBOC’s liquidity support to prop up the market bubble, it then curbed the central bank’s future capacity to stimulate the economy. After all, you can only print so much money without causing high inflation and other serious macroeconomic problems.

That left Chinese policymakers with only one quick solution to reinvigorate growth, which was devaluation. Of course, Beijing has skillfully packaged this move as part of reforms to make the yuan more flexible. In a technical sense, this is true.

But when you examine the domestic political context of the decision to devalue the currency, it can be seen as a desperate — and a likely unsuccessful — act to export China’s economic woes to a global economy that mirrors the country’s own structural economic maladies: anemic demand, mountainous debts, and excess capacity.

Those familiar with Beijing’s “whatever it takes” and “shoot first” modus operandi cannot help but feel that they are watching the same horror movie all over again.

NIKKEI ASIAN REVIEW

Minxin Pei is a professor of government at Claremont McKenna College and a non-resident senior fellow of the German Marshall Fund of the United States. 

 

Beijing – Tingkat paritas tengah nilai tukar mata uang China renminbi atau yuan, menguat 35 basis poin menjadi 6,3975 terhadap dolar AS, Jumat (14/08/2015). Itu setelah selama tiga hari merosot, menurut Sistem Perdagangan Valuta Asing China.

Di pasar spot valuta asing China, yuan diperbolehkan untuk naik atau turun sebesar dua persen dari tingkat paritas tengahnya setiap hari perdagangan. Bank sentral China, People’s Bank of China (PBoC) mereformasi sistem pembentukan nilai tukar pada 11 Agustus 2015 menjadi lebih mencerminkan pengembangan pasar dalam nilai tukar yuan China terhadap dolar AS.

Tingkat paritas tengah yuan terhadap dolar AS didasarkan pada rata-rata tertimbang dari harga yang ditawarkan oleh pelaku pasar sebelum pembukaan pasar setiap hari kerja dan juga mengacu pada tingkat penutupan pada hari sebelumnya, dalam hubungannya dengan kondisi penawaran dan permintaan serta pergerakan mata uang utama.

http://pasarmodal.inilah.com/read/detail/2229581/yuan-china-menguat-terhadap-dolar-as
Sumber : INILAH.COM

BEIJING nikkei– It took just three days to show the limits of China’s risky attempt at devaluing its way out of an economic jam.

Over that period, the People’s Bank of China lowered the guidance rate around which the currency floats by about 4.5%, starting with a sudden, nearly 2% drop Tuesday.

A gap of “about 3%” had separated the benchmark from market rates, PBOC Assistant Gov. Zhang Xiaohui said in a rare news conference Thursday. The bank’s “correction” had “basically ended,” Zhang said, indicating that big reductions were no longer needed.

Deputy Gov. Yi Gang called speculation that the central bank would devalue the yuan by 10% to stimulate exports “groundless.” Yi flatly denied what most observers saw as a clear aim of lowering the guidance rate: helping Chinese-made goods compete in foreign markets.

Only a select few media outlets were let into the briefing — a type of affair that lives up to its Chinese name, chui feng hui, which literally means “blow-the-wind meetings.” Reporters heard only what the monetary authorities wanted them to. Top PBOC officials do not hold regular news conferences; this one was essentially forced by market unrest.

The currency moves, too, were a forced response to an unexpectedly deep economic slowdown. Gauges of industrial output, investment, consumption and exports all worsened in July. Export-driven companies welcome a weak yuan — computer manufacturer Lenovo Group said so, in fact. A set of export promotion measures drawn up by the government late last month included a proposal for increasing the yuan’s downside potential.

Massively devaluing the yuan would disrupt global financial markets and rile the U.S., which already has a yawning trade deficit with China. It could also lead to rapid capital outflows from China. That Beijing tried such a risky policy gives an indication of its economic predicament.

The PBOC, meanwhile, needed a way to increase the potency of its monetary easing. It had been keeping the yuan artificially strong against downward pressures, in line with the Xi government’s goal of raising the currency’s international standing. This entailed buying up yuan, taking them out of circulation and, in effect, counteracting its own monetary stimulus.

The central bank has cut interest rates and taken other steps to loosen credit four times since last fall, but the economy has refused to perk up as hoped. This lack of improvement seems to have driven the PBOC to put supporting the economy ahead of padding the yuan’s role in trade and investment.

Indonesia masuk masa resesi dan rupiah terjebak dalam currency war yang dilakukan Jepang, Tiongkok dan AS.

infobank

Jakarta—Kebijakan devaluasi mata uang Tiongkok, Yuan turut memperdalam pelemahan Rupiah. Sayangnya, kabarnya Tiongkok diperkirakan masih akan melakukan devaluasi secara gradually.

Martin Panggabean, Chief Economist IGIco Advisory mengatakan, agar Indonesia tidak menjadi ‘korban’ dari kebijakan finansial negara lain, maka pemerintah perlu menyiapkan grand plan strategy dalam menghadapi global currency war.

“Dampak global currency war terhadap kondisi Indonesia ini akan berpengaruh sangat signifikan, karena perekonomian kita sangat rentan. Defisit terhadap Tiongkok akan membengkak, karena banyak proyek infrastruktur di Tanah Air mengandalkan Tiongkok. Tidak hanya raw material, capital goods, tetapi juga human resources,” ungkap Martin.

Menurut Martin, Indonesia dengan pertumbuhan sekitar 5% menjadi target empuk bagi pertarungan negara-negara seperti Tiongkok Jepang dan lainnya sebagai pasar mereka. Global currency war, tambahnya adalah sebuah kenyataan bahwa rupiah ikut melemah, dan ini merupakan blessing in disguise. Setelah melemah sejak 2013, PPP index Indonesia ternyata mirip dengan Malaysia yang juga adalah kompetitor Indonesia di pasar minyak kelapa sawit, coklat dan karet.

“Artinya bila Rupiah tidak melemah ke level Rp13.000an per dolar AS, maka ekonomi Indonesia yang menjadi bermasalah dalam konteks perdagangan internasional,” tambahnya.

‎Martin menjelaskan, dengan pendekatan ekspektasi pasar ini pelaku pasar finansial (pemodal) terlihat cenderung pesimis terhadap kinerja perekonomian Indonesia.  “Perlu disadari bahwa ekonomi Indonesia sedang memasuki fase resesi, sementara ekonomi Amerika Serikat justru akan meninggalkan resesi, dan masuk ke fase normal. Dengan demikian penguatan dolar US adalah konsekuensi yang wajar.”

Menurut Martin, fase pesimisme ini dimulai sejak Februari (pada saat kurs masih pada Rp12.600 pe dolar AS) dan terus memburuk sejak itu. Jika pada awal tahun para pelaku pasar masih memperkirakan adanya depresiasi sebesar 5.5% sepanjang 2015, kini para pelaku pasar memperkirakan bahwa depresiasi 12 bulan kedepan adalah sekitar 11%.

Dia menilai para pelaku pasar saat ini memperkirakan bahwa kurs pada akhir tahun 2015 akan berada pada kisaran Rp14.000 per dolar AS, sementara pada akhir 2016 kurs sudah mendekati level Rp15.000 per dolar AS.

Keputusan tiba-tiba The People’s Bank of China (POB) yang mendevaluasi 1,9% langsung menohok pasar keuangan global, diperkirakan masih akan berlanjut. Tiongkok secara gradually akan melemahkan mata uangnya. “Sama seperti dulu secara gradually mereka menguatkan mata uangnya. Kondisi ini yang akan membuat pasar sulit stabil dan unpredictable.”

Sebelumnya, lanjut Martin, Jepang telah mengambil langkah kebijakan devaluasi untuk menumbuhkan ekspor dan ini terbilang sukses, bahkan tanpa kritik dari Amerika Serikat serta negara barat lainnya.

‎”Belum lagi IMF membatalkan rencana  memasukkan Yuan kedalam SDR (Special Drawing Rights). Momentum inilah yang digunakan Tiongkok untuk melemahkan mata uangnya. Big Questions untuk kita adalah : Berapa kali Tiongkok akan melakukan devalusi mata uangnya,” tegas Martin.

Untuk itu, pemerintah dengan tim menteri koordinator ekonomi yang baru diharapkan mempunyai strategi dan grand plan  “briliant” untuk menghadapi pertarungan mata uang global ini. Martin memperkirakan, dalam 6 bulan kedepan Tiongkok tidak akan berhenti melakukan devaluasi sampai terjadi recovery ekonomi didalam negerinya.

“Berarti currency war masih berlanjut. Tiongkok akan sangat kuat terhadap tekanan Amerika Serikat dan negara barat lainnya, karena negara Paman Sam sudah  kehilangan kredibilitasnya ketika tidak mengkritisi kebijakan Jepang dalam melakukan devaluasi, secara eksplisit,” jelasnya.

Dia menambahkan, kebijakan Tiongkok tidak akan berhenti hanya di pasar finansial saja, goal-nya adalah ekspor ke berbagai negara di dunia.

“Saat ini pasar akan bergerak, rupiah akan rentan, kita akan menjadi sasaran produk impor. Lalu bagaimana respon pemerintah untuk dapat benefit maksimum dari kondisi ini,” jelasnya.

Martin berharap Tim Ekonomi yang dipimpin Darmin Nasution dapat meyakinkan pasar, dalam melakukan pengendalian defisit government, serta pengendalian current account. Selain itu pemerintah bersama dengan OJK dan Bank Indonesia juga diharapkan menyiapkan strategi ketahanan industri  perbankan terhadap serangan currency war.

China’s currency cuts aren’t always an attempt to bail out exporters. The most recent move has bigger policy implications.

Donald Trump may very well have a field day with today’s currency news, as analysts predict. But he shouldn’t.

Today China’s central bank devalued the country’s currency, the renminbi, by about 2% against the U.S. dollar. It was the biggest one-day move since the renminbi, or yuan, officially de-pegged from the U.S. dollar in 2005. The yuan maintains a close relationship with the dollar and trades 2% in each direction from a midpoint selected by China. Today, that midpoint went from 6.11 yuan per U.S. dollar to 6.22.

Trump and others may say China is purposely devaluing its currency to help exports. After all, its economy is struggling to hit the government 7% growth target.

But is that what’s really going on?

For the most part, China has recently actually wanted its currency to steadily rise, for political reasons and to keep capital from flowing out of China. China’s domestic and international goals align with a stronger yuan. That helps explain why presidential candidates like Trump haven’t been spouting off about China’s currency management as much of late.

The answer to why China’s government devalued its currency Tuesday probably has more to do with the dynamics of global currency markets than a sudden urge to help Chinese exporters make their goods cheaper on the world market.

First, the yuan is strongly related to the dollar because China still manages the exchange rate within a range against the dollar. When the U.S. dollar rises rapidly against world currencies, like it has in the past year to pull almost even with the euro, the yuan also rises against China’s trading partners’ currencies.

China has wanted the yuan to steadily rise against trade-weighted partners for a while. To keep that appreciation gradual, as the dollar rockets upwards, it may have to devalue a little, says Jonathan Anderson, at Emerging Advisors Group, one of the clearest observers of China’s markets. “But this is not the same as a “competitive devaluation” of the renminbi —and there’s nothing like that on the cards,” he wrote today.

“All China is doing today is managing the pace of trade-weighted renminbi appreciation,” Anderson continued. “Any attempt to gain truly meaningful competitiveness vis-à-vis trading partners would require, say, a 20% to 40% devaluation against the dollar.” (menurut gw berarti Yuan akan terdepresiasi ke 1US$ = 7-8 Yuan dalam setaon ke depan).

If China had devalued the yuan by, say, 20%, it would clearly be an effort to boost exports for its advantage. A 2% devaluation is different: it simply keeps the yuan a little more in line with trading partners’ currencies, which have lost value relative to the U.S. dollar. (For more on the U.S. dollar’s rise, read this recent Fortune piece.)

As mentioned, China actually wants a stronger currency. As recently as April, it was actively trying to strengthen the yuan, the Wall Street Journal reported. The country’s central bank purchased the yuan in the currency markets and sold U.S. dollar holdings, a move aimed at stemming capital outflows from China as the yuan was falling.

As Chen Long of Gavekal Dragonomics in Hong Kong recently explained, China has twin (and sometimes competing) goals for exchange rates. On the domestic front, it wants to help exporters with a cheaper currency, but it also wants to maintain a strong currency to prevent capital outflows that may weaken the country’s economy further. On the international side, China wants to avoid a trade war with the U.S., which it would have if it severely weakened the currency. It also wants to boost international use of the yuan for political purposes, as China asserts itself more strongly around the world. The country’s recent campaign to have the yuan join the mostly meaningless IMF reserve currency is one example of China desiring a strong currency. In the end, these multiple goals again promote a slightly stronger currency.

China’s central bank said Tuesday’s yuan depreciation was a way to make the country’s financial system more market-oriented. The bank said market spot prices would now determine the daily position, implying that the central bank would step in less to influence it. Over the past few months the yuan-dollar spot price had been lower than the exchange rate, and it became clear the central bank was supporting a stronger yuan.

There are reasons the government doesn’t deserve the benefit of the doubt when it says it’s in the business of market-based approaches. President Xi Jinping’s administration said the same thing before pledging around$800 billion in government money last month to prop up the falling stock market. China’s words and actions don’t always match.

But there are also reasons that today’s devaluation shouldn’t only be viewed through the prism of trade. First, other exporters in Asia, including South Korea and Taiwan, are hurting because of weak demand abroad. Sluggish economies in Europe and the U.S. influence China’s exports. That’s is not all solved by currency devaluations. Second, China can use other mechanisms to boost its economy. Internet rates and bank reserve requirements can still be cut considerably, and analysts expect that to happen. More government spending is already in the works: China’s banks will issue 1 trillion yuan worth of bonds for infrastructure spending, according to recentreports.

For now, it’s too early to say China is starting a currency war, even if that may be the West’s first inclination.

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