The yuan fell the most in almost a month before data forecast to show export growth halved in May, revealing subdued demand for goods from China.
Outbound shipments rose 7.1 percent in May from a year earlier, less than half the previous month’s reported 14.7 percent, based on the median estimate of 34 economists ahead of data due June 8. Gross domestic product growth slowed to 7.7 percent in the first three months from 7.9 percent in the preceding quarter. Analysts last month trimmed forecasts for the April-June period to a median projection of 7.8 percent from as much as 8.20 in April, according to a Bloomberg survey.
The yuan dropped 0.14 percent to 6.1362 per dollar in Shanghai, the biggest decline since May 10, according to China Foreign Exchange Trade System prices. It gained 1.53 percent this year, Asia’s best currency performance, and touched 6.1210 on June 3 and May 27, the strongest level since the government unified official and market exchange rates at the end of 1993.
“China’s growth is being downgraded by quite a lot of analysts,” said Nizam Idris, head of currency strategy at Macquarie Group Ltd. in Singapore. “The market is just gravitating toward that.” He predicts the yuan will trade in the range of 6.13 to 6.15 per dollar over the next month.
The government will also report import data on June 8, followed by releases on prices, industrial production, retail sales and investment on June 9.
A crackdown on fake invoices used to disguise money flows is probably cutting China’s trade figures, according to Zhang Zhiwei, chief China economist at Nomura Holdings Inc. in Hong Kong. Analysts in a separate survey last month said January-April export growth was overstated by 4 to 13 percentage points.
The fast pace of the yuan’s appreciation this year may halt because of conflicting views in the market on the outlook, China Securities Journal said in a front-page commentary today.
Yuan foreign-exchange positions, a gauge of capital inflows, may grow at a slower pace of 100 billion yuan to 200 billion yuan a month from May after China’s crackdown on money inflows, the newspaper reported, citing analysts from China Merchant Securities Co. The amount increased 1.51 trillion yuan in the first four months, official data show.
The People’s Bank of China set its daily fixing 0.03 percent higher at 6.1737 per dollar today. The spot rate is allowed to diverge from the fixing by a maximum 1 percent.
In Hong Kong’s offshore market, the yuan declined 0.08 percent to 6.1318 per dollar, according to data compiled by Bloomberg. Twelve-month non-deliverable forwards weakened 0.05 percent to 6.2520, trading at a 1.9 percent discount to the onshore exchange rate.
One-month implied volatility in the yuan, a measure of expected moves in the exchange rate used to price options, fell three basis points, or 0.03 percentage point, to 1.87 percent.
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