China: April foreign trade, foreign reserves preview – ING

By FXStreet Tim Condon, Chief Economist at ING, suggests that they credit PBOC policy for China’s slowing reserve losses from the US$100bn/month pace of November-January while their yearend USDCNY forecast is 6.47.

Key Quotes

“April trade data are due Sunday, May 8. The consensus forecast for export growth is – 0.5%. March’s +11.5% export growth was a one-off from base effects from extreme weakness a year earlier; the sequential bounce from seasonal January-February weakness left exports 21% below their 4Q average vs. 4% below on average in 2011-14.

China’s exports, unusually, underperformed those of their North Asian neighbours in the first quarter. While their -9.7% growth was in the same ballpark as Korea’s and Taiwan’s, it was a significant deceleration from 4Q16. Korea’s and Taiwan’s growth was little changed in 1Q16. Our baseline is that this underperformance won’t be reversed and 2016 export growth will be -9.1%.

The import growth forecast is -4.0%. The data are interesting in part because of their divergence from the amount banks report their customers as having bought to pay for imports. All estimates of capital outflows for 2015 include some portion of the US$524bn by which banks’ payments on behalf of clients for goods imports exceeded customs-basis imports. …read more

Source:: FX Street