Published: Чт, Июля 05, 2018
Business | By Kate Woods

China central banker says currency slide under observation

China central banker says currency slide under observation

Chinese stocks slipped on Monday, handing back some hard-won gains from a bounce late last week as worries mount ahead of a US move to impose $34 billion of tariffs on Chinese exports, Reuters reports.

Shanghai shed 0.2 percent and Singapore lost 0.5 percent, while Tokyo ended the morning marginally lower after fluctuating through the morning.

Fears over a slowdown in the country's economy and the start of a trade war with the United States have been weighing on Chinese shares and the yuan.

"It's not clear yet if the trade row will derail the global economy as a whole but it's already clear that it will harm Chinese companies at least", said Ayako Sera, market strategist at Sumitomo Mitsui Trust Bank. He said that the bank is closely watching the foreign exchange market's recent fluctuations due to a strengthening dollar and external uncertainties.

The currency hit to an eleventh month low today after it fell almost 1% against the United States dollar in early trading, and recovered to gain 0.3%.

At one point on Tuesday the yuan hit 6.7204 per dollar, its weakest level since early August, before sharply rebounding on reassuring remarks from Yi Gang, Governor of the People's Bank of China (PBOC). At 0542 GMT it was trading at 6.7010.

To deepen market-oriented exchange rate reform.

Officials in China, the epicenter of the global trade row, have warned the United States that the tit-for-tat tariffs on each others' goods will ultimately prove detrimental for American businesses and jobs.

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European markets were up and the USA bourses were down and the Asian markets figure also to move lower.

"But if you look around, stocks fell and safe-haven bids for US Treasuries climbed".

"The big driver behind US resilience is that tech has been strong", said Rory McPherson, head of investment strategy at asset manager Psigma.

The mood was more cheerful in Europe where a pan-European equity index rose half a percent .STOXX , the euro firmed marginally and bond yields rose after German Chancellor Angela Merkel struck the deal with her Bavarian conservative coalition partners. -China trade tensions may pose a risk.

Dealers brushed off a late rally on Wall Street to continue a selling frenzy that has hammered equities across the globe, while high-yielding currencies are also under pressure against the dollar. Its "base case" is for the currency to end the year at 6.6.

The Canadian dollar strengthened against greenback on Tuesday as oil prices rose to 3-1/2-year highs and domestic manufacturing data supported the view that the Bank of Canada will hike interest rates next week.

Deutsche Bank strategist Perry Kojodjojo said he does not believe China would "weaponize" its currency as part of retaliation against the U.S., given the potential costs.

Energy stocks have been boosted by Brent crude's rise past $78 a barrel, McPherson noted.

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