Wider yuan trade band spooks investors
By Hu Xiaocen |
April 17, 2012, Tuesday
|
Print Edition
Print Edition
SHANGHAI stocks closed lower yesterday as analysts said the yuan's wider trading band posed short-term risks to exporters although the more flexible band for the currency may support China's economic growth in the long term.
The Shanghai Composite Index dipped 0.09 percent to 2,357.03 points.
The yuan's trading band against the US dollar was doubled from 0.5 percent to 1 percent, effective yesterday, according to a People's Bank of China statement on Saturday.
"The currency's one-way appreciation has come to an end," said Qu Hongbin, a chief economist of HSBC. He also said the wider band would relieve exporters from the pressure of a stronger yuan.
But some analysts disagreed with Qu, saying the wider band will accelerate the yuan's internationalization and allow a slow appreciation in the currency in the long term and this will hurt exporters and other firms such as shippers.
Cargo shippers sank. China COSCO Holdings Co, Asia's biggest shipper, shed 0.8 percent to 5.18 yuan (82 US cents). COSCO Shipping Co, a unit of China COSCO, lost 1.2 percent to 4.82 yuan, and China Shipping Container Lines Co fell 1.3 percent to 3.07 yuan.
Coal producers also declined on lower demand amid uncertain global prospects. China Shenhua Energy Co, the nation's largest coal producer, dipped 0.3 percent to 26.37 yuan, and Datong Coal Industry Co fell 1.8 percent to end at 13.03 yuan.
The Shanghai Composite Index dipped 0.09 percent to 2,357.03 points.
The yuan's trading band against the US dollar was doubled from 0.5 percent to 1 percent, effective yesterday, according to a People's Bank of China statement on Saturday.
"The currency's one-way appreciation has come to an end," said Qu Hongbin, a chief economist of HSBC. He also said the wider band would relieve exporters from the pressure of a stronger yuan.
But some analysts disagreed with Qu, saying the wider band will accelerate the yuan's internationalization and allow a slow appreciation in the currency in the long term and this will hurt exporters and other firms such as shippers.
Cargo shippers sank. China COSCO Holdings Co, Asia's biggest shipper, shed 0.8 percent to 5.18 yuan (82 US cents). COSCO Shipping Co, a unit of China COSCO, lost 1.2 percent to 4.82 yuan, and China Shipping Container Lines Co fell 1.3 percent to 3.07 yuan.
Coal producers also declined on lower demand amid uncertain global prospects. China Shenhua Energy Co, the nation's largest coal producer, dipped 0.3 percent to 26.37 yuan, and Datong Coal Industry Co fell 1.8 percent to end at 13.03 yuan.
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