China lets its currency weaken past a
psychological barrier.
On Monday, China’s central bank fixed the initial
value of the renminbi at more than 7 to the dollar for the first time in more
than two years.
Keith
Bradsher
By Keith
Bradsher
https://www.nytimes.com/live/2022/09/25/business/economy-news-inflation-stocks
BEIJING —
As the euro has fallen below parity with the dollar and the British pound
plunges toward a one-for-one exchange rate as well, another currency is also
weakening against the dollar: China’s renminbi.
For
Shanghai trading on Monday morning, China’s central bank, the People’s Bank of
China, fixed the initial value of the renminbi at more than 7 to the dollar for
the first time in more than two years. It was the weakest fixing of the Chinese
currency since July 2020, breaking through a mainly psychological barrier that
the renminbi would continue to be worth between 6 and 7 to the dollar.
The daily
fixing of the renminbi’s value in Shanghai establishes a range in which the
central bank will allow the renminbi to trade for the day. The central bank
fixed the initial value on Monday at 7.0298 renminbi to the dollar.
In recent
weeks, the Chinese currency has consistently tended to trade at the weaker end
of the range, and Monday was no exception. By early afternoon, it was changing
hands at about 7.16 to the dollar and approaching a level of weakness not seen
since the spring of 2008.
The
People’s Bank of China on Monday tightened a technical regulation to make it
slightly more difficult for traders to place large bets on a further decline in
the value of the renminbi.
China’s
decision to let a psychological barrier like 7-to-the-dollar be breached, while
tightening a technical rule, “basically meant the People’s Bank of China does
not want to try to defend any particular foreign exchange level, but to slow
the pace of depreciation,” said Peiqian Liu, a China economist at NatWest
Markets.
A weaker
renminbi helps make China’s exports more competitive in overseas markets,
particularly the United States. Lower prices for China’s wide range of
manufactured goods are starting to help reduce persistently high inflation in
the United States.
But the
strength of the dollar against the renminbi and other currencies — including
the euro, pound and yen — also makes American exports more costly and less
competitive in foreign markets.
A big part
of the fall in the renminbi, which has
lost roughly a tenth of its value versus the dollar this year, reflects the
dollar’s strength as opposed to the renminbi’s weakness, said Larry Hu, an
economist at Macquarie Group of Australia. “The renminbi against a basket of
currencies this year is flat,” he said.
The
renminbi’s fall is striking because China this year has run the largest monthly
trade surpluses the world has ever seen. Stringent “zero Covid” policies,
including the lockdowns of large cities, have crippled demand for imports in
China. Exports stayed strong through midsummer, although they have also begun to
falter lately.
But
exporters have also been hesitant to convert the payments they receive in
foreign currencies into renminbi, Mr. Hu said. Exporters have been leaving the
payments in dollars in foreign bank accounts as the dollar becomes worth more
and more in renminbi terms.
The weaker
renminbi makes it more expensive for many Chinese companies, notably real
estate developers, to repay bonds and other debts that they owe in dollars.
Sharp
increases in short-term interest rates by the Federal Reserve have made it more
attractive to deposit or lend money in the United States. China, by contrast,
has been gradually reducing interest rates. That has helped soften a downturn
in its real estate sector, but has also made it less appealing to keep money in
China.
China also
has some of the world’s most stringent restrictions on moving large sums of
money in or out of the country, partly to keep wealthy investors from heading
elsewhere when economic growth stalls, as has happened lately.
Sem comentários:
Enviar um comentário