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» 23/07/2009 [Company watch]
China Aoxing Pharmaceutical Corp. Receives Renewal of GMP Certification for Capsule Dosage Form of Pharmaceutical Products
» 15/03/2010 [Industry news]
Recordati S.p.A And Lee Pharmaceutical Announce Partnership For Zanidip(R) In China
» 26/10/2009 [Finance]
China Growth to Remain Fast in Fourth Quarter, Official Says
» 17/08/2009 [Industry news]
Chindex Posts Profit on Product Sales, Health Services
» 07/05/2010 [Industry news]
Hong Kong: Recall of all products manufactured by Quality Pharmaceutical Lab Ltd
COMPANY NEWS » Finance back to previous page show list
»05/01/2009 [Finance]
Yuan Weakens on Speculation China Will Stall Gains; Bonds Rise

By Judy Chen and Jiang Jianguo (Bloomberg): China’s yuan weakened, ending two days of gains, on speculation the worsening economy will prompt the government to rein in currency appreciation this year to protect exports. Government bonds rose.

 
By Judy Chen and Jiang Jianguo (Bloomberg) -- China’s yuan weakened, ending two days of gains, on speculation the worsening economy will prompt the government to rein in currency appreciation this year to protect exports. Government bonds rose. The People’s Bank of China set the reference rate for yuan trading at 6.8367 today, little changed from 6.8321 three months ago, signaling its intention to halt the currency’s gains following a record 7.1 percent advance in 2008. An industry report showed on Jan. 4 that China’s manufacturing shrank for a third month in December as overseas sales slumped. The reference rates indicate last year’s fast pace of appreciation is over,” said Huang Yi, a foreign-exchange trader at Guangdong Development Bank Co. in Guangzhou. “A stronger currency will give a devastating blow to exporters and hurt the economy.” The yuan weakened 0.12 percent to 6.8312 a dollar as of 5:30 p.m. in Shanghai, from 6.8230 on Dec. 31, according to the China Foreign Exchange Trade System. Huang forecast the difference between the yuan’s highest and lowest levels this year won’t exceed 4 percent. The Purchasing Managers’ Index rose to a seasonally adjusted 41.2 in December from 38.8 in November, the China Federation of Logistics and Purchasing said on Jan. 4 in an e- mailed statement. A reading below 50 indicates output contracted. Non-deliverable forwards contracts indicate the yuan will fall 2.5 percent to 7.0062 per dollar in 12 months, while a Bloomberg News survey of 30 analysts shows its forecast to strengthen to 6.8 in that time. ‘Better Than The Rest’ Still, China’s economic growth, buoyed by the governments 4 trillion yuan ($586 billion) stimulus package, will likely outperform other countries’ and lead to moderate appreciation, said Huang Yiping, chief Asia-Pacific economist at Citigroup Inc. People will realize that China’s macroeconomic picture looks better than the rest of the world, Huang said in a phone interview from Hong Kong today. The Chinese currency will rise more than 4 percent to 6.55 per dollar this year, he forecast. Government bonds rose on speculation the central bank will lower interest rates in the first quarter, increasing liquidity in the bond market. China lowered it benchmark interest rate by 0.27 percentage point on Dec. 22, the fifth reduction since the start of September, after inflation slowed to a 22-month low of 2.4 percent in November. Deflation Risk “The consumer price index may drop below zero in the first three months,” said Pang Aihua, a fixed-income analyst in Beijing at China Citic Bank Co., a unit of China’s biggest state investment company. “More money supply will help bonds extend their rally, but at a slower pace.” China’s government bonds gained 11 percent last year, after losing 2 percent in 2007, according to local-currency debt indexes compiled by HSBC Holdings Plc. The yield on the 1.77 percent note due December 2013 fell three basis points to 1.79 percent, according to the China Interbank Bond Market. The price climbed 0.13 per 100 yuan face amount to 99.93. A basis point is 0.01 percentage point. China’s finance ministry may sell 1.3 trillion yuan ($191 billion) of bonds this year, 60 percent more than in 2008, according to Chinabond, the country’s biggest debt-clearing house. The ministry may sell 1.2 trillion yuan of bonds in 2010, it said.

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