The Chinese yuan is rising to kick off the trading week, buoyed by stronger confidence in the worldâs second-largest economy and a strong warning from the nationâs top banking regulator for the currency bears. But the rally was capped by disappointing economic data and worsening trade relations with the US.
Speaking at a Beijing finance forum on Monday, the head of the China Banking and Insurance Regulatory Commission (CBIRC) said that he does not anticipate a persistent and long-term decline in the currency. He added that any speculative short sellers will endure âheavy lossesâ should they place bets against the yuan.
Short-term fluctuation of the yuan exchange rate is normal, but in the long-run, Chinaâs economic fundamentals determine that the yuan will not depreciate persistently.
Those who speculate and short the yuan will for sure suffer heavy loss.
We must be especially vigilant about money from overseas moving in and out in large quantities, and hot speculative money, and we must resolutely fight bubbles in real estate and financial assets.
Xiao Yuanqi, the spokesman for the CBIRC, quoted a speech from Guo Shuqing, CBIRCâs chairman and the Communist Party chief of the Peopleâs Bank of China (PBOC).
Meanwhile, other Chinese officials believe the nation can weather the storm, even if the trade war lingers past summer and into the holiday season.
Wang Zhijun, vice minister of the Ministry of Industry and Information Technology, told Xinhua News Agency that the recent US hikes on tariffs on $200 billion worth of Chinese goods are âmanageable.â He noted that the nation can handle the levies because they only impact 8% of total exports.
But leaders will pay close attention to the official manufacturing and non-manufacturing Purchasing Managersâ Index (PMI) that will be released on Thursday. That said, Beijing is still reeling from the continued decline of industrial profits as they fell 3.4% in April, down from the 3.3% slump in March.
On the trade front, China accused the US of lying when it claimed that Huawei Technologies was fibbing about its connection to the Chinese government. The White House stated that it was âin no rushâ to complete a trade deal with Beijing.
The USD/CNY currency pair dipped 0.03% to 6.8982, from an opening of 6.9003, at 20:19 GMT on Monday. The EUR/CNY slid 0.17% to 7.7222, from an opening of 7.7356.
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