Feb. 13 (Bloomberg) -- Yuan forwards declined for a third day after data showed China’s imports slumped more than forecast and lending grew less than estimated, adding to signs growth is weakening in the world’s second-largest economy.
Chinese Premier Wen Jiabao said the government should start “fine-tuning” economic policies in the first quarter because economic conditions in January deserve attention, according to a report from Xinhua News Agency yesterday. Imports dropped 15.3 percent in January from a year earlier, more than the 3.6 percent decline forecast in a Bloomberg survey, an official report showed Feb. 10. The yuan in Shanghai erased earlier losses before Vice President Xi Jinping meets for talks with U.S. President Barack Obama at the White House tomorrow.
“The decline in imports sparked concern that domestic consumption is not giving much support to China’s growth,” said Edmond Law, deputy head of foreign-exchange at BWC Capital Markets in Hong Kong. “The drop could be exaggerated by the Lunar New Year effect. Xi’s U.S. visit will likely lead to a stable, if not stronger, exchange rate.”
Twelve-month non-deliverable forwards fell 0.06 percent to 6.2735 per dollar as of 5:06 p.m. in Hong Kong, according to data compiled by Bloomberg. The contracts were at a 0.4 percent premium to the onshore spot rate.
The yuan closed 0.02 percent higher at 6.2971 in Shanghai, after earlier declining as much as 0.12 percent, according to the China Foreign Exchange Trade System. It touched 6.2884 on Feb. 10, the strongest level since the country unified the official and market exchange rates at the end of 1993. In Hong Kong’s offshore market, the yuan was steady at 6.2973.
The People’s Bank of China left the reference rate little changed at 6.2939 today, just shy of the record level of 6.2937 set on Feb. 10. The currency is allowed to trade 0.5 percent on either side of the daily fixing.
Banks extended 738.1 billion yuan ($117 billion) of new yuan-denominated loans last month, compared with the 1 trillion yuan median estimate of economists surveyed by Bloomberg. New lending totaled 640.5 billion yuan in December.
--Editors: Andrew Janes, James Regan
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