Yuan touched five-year low in offshore trading; markets speculate more devaluation

By FXStreet FXStreet (Mumbai) – The Chinese economy did not have a great start to 2016. The latest PMI figures have been dismal. The Caixin manufacturing PMI fell in December to 48.2, down from 48.6 registered in November, contracting for a tenth month. Caixin data released today showed activity in the services sector expanded at its slowest rate in 17 months in December. The Caixin/Markit services PMI fell to 50.2 in December from 51.2 in November. The latest data dimmed hopes that policy makers’ attempt to restructure the economy with more emphasis on services and consumption will offset the drag from weakness in the manufacturing sector.

That was not all. China’s woes continued when on the very first trading day of 2016, a 7 per cent selloff in the CSI 300 Index caused stock trading to be suspended in China. The PBoC’s damage control initiative which comprised injecting 130 billion yuan ($19.9 billion) into financial system failed to soothe jittery investors. Chinese stocks yesterday ended down 0.3 per cent. The initial rebound seen post the central bank’s decision to increase capital in the system was short lived as investors continued to suspect Beijing’s further easing intentions.

Yuan lowered

The PBoC, amidst the grim economic scenario, …read more

Source:: FX Street