The Chinese yuan is sliding against most major currencies to kick off the trading week as the latest economic data highlighted just how damaging the fallout of the coronavirus has been to Beijing. It may be some time until China fully recovers from Covid-19, especially with hundreds of new cases being reported. Plus, the outbreak appears to have spread worldwide, causing consternation about global supply chains and the near-term future of financial markets.
The National Bureau of Statistics (NBS) published the readings of its manufacturing and non-manufacturing purchasing managersâ indexes (PMI) over the weekend â anything below 50 indicates a contraction. The official gauges were devastating: the manufacturing PMI plunged from 50 in January to 35.7 in February and the non-manufacturing PMI sank from 54.1 to 29.6. Also, the Caixin manufacturing PMI for February plummeted from 51.1 to 40.3.
All the readings came in far worse than what the market had anticipated ahead of the release.
Experts are warning that this is early data, too. So, in the coming weeks, investors might witness even more disappointing figures. Since the coronavirus does not seem to be going away anytime soon, March and perhaps April data could be a lot worse.
Next on the data front, trade, inflation, vehicle sales, retail sales, and industrial production.
Meanwhile, Chinese investors are betting on further fiscal and monetary stimulus, particularly in infrastructure. A lot of local businesses that would benefit from public works spending witnessed big gains in Asian markets on Monday. In an interesting turn of events, more than 200 stocks in Shanghai and Shenzhen surged by the 10% daily limit. That said, health authorities continue to urge caution in China and the rest of the world.
The global death toll topped 3,000 and confirmed cases are nearing 90,000. The major coronavirus has been the two deaths in the US, the community spread in Australia, and the 50% spike in infections in Italy. Some health experts are going as far as saying the world has reached past the point of containment because the virus is spreading too quickly.
The USD/CNY currency pair rose 0.12% to 7.0003, from an opening of 6.9919, at 12:51 GMT on Monday. The EUR/CNY soared 1.17% to 7.8015, from an opening of 7.7110.
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Chinese Yuan Sinks As Purchasing Indexes Crash to Record Lows
