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Mon 15 Jul 2019 21:34GMT

Chinese Yuan (CYN) hit a 19-year high before disappointing GDP data pared gains

Published: 15 Apr at 11 AM Tags: Euro, Dollar, America, UK, Eurozone, Australian Dollar, New Zealand Dollar, Australia, New Zealand, USA, China,

The Chinese Yuan soared to a 19-year high after the Chinese Central Bank set a record fixing against the US Dollar. The currency then pared its gains as the government reported a surprise slowdown in economic growth.

The Bank of China raised the daily reference rate by 0.08% to 6.2454 per Dollar. The Yuan looks set to become one of the world’s most important currencies over the next few years as central banks such as the Bank of England have agreed deals to hold the currency.

The Yuan could have risen further but instead was halted after the government revealed that Gross Domestic Product increased by 7.7% in the first quarter of 2013. Despite the figure being one that European nations can only dream of the figure disappointed the markets and spurred fears that the global economic recovering is stalling. Economists had been expecting the figure to come in at 8%.
“With growth looking OK but not great, there’s little incentive for China to accelerate the pace of yuan appreciation,” said Sim Moh Siong, a currency strategist at Bank of Singapore Ltd. “This signals bearish tones for other markets, including high-beta currencies like the Aussie and commodities.”

Despite the market being disappointed by the GDP data China has continued to post strong data in manufacturing, services and retail sales. In March, industrial production rose by 8.9% and retail sales advanced by 12.6%.
The weaker than expected GDP figure has caused the major commodity based currencies like the Aussie, Kiwi and Loonie to all decline sharply.

The Chinese Yuan soared to a 19-year high after the Chinese Central Bank set a record fixing against the US Dollar. The currency then pared its gains as the government reported a surprise slowdown in economic growth.

The Bank of China raised the daily reference rate by 0.08% to 6.2454 per Dollar. The Yuan looks set to become one of the world’s most important currencies over the next few years as central banks such as the Bank of England have agreed deals to hold the currency.

The Yuan could have risen further but instead was halted after the government revealed that Gross Domestic Product increased by 7.7% in the first quarter of 2013. Despite the figure being one that European nations can only dream of the figure disappointed the markets and spurred fears that the global economic recovering is stalling. Economists had been expecting the figure to come in at 8%.

“With growth looking OK but not great, there’s little incentive for China to accelerate the pace of yuan appreciation,” said Sim Moh Siong, a currency strategist at Bank of Singapore Ltd. “This signals bearish tones for other markets, including high-beta currencies like the Aussie and commodities.”

Despite the market being disappointed by the GDP data China has continued to post strong data in manufacturing, services and retail sales. In March, industrial production rose by 8.9% and retail sales advanced by 12.6%.

The weaker than expected GDP figure has caused the major commodity based currencies like the Aussie, Kiwi and Loonie to all decline sharply.

As of Monday, 15th April 2013, the Pound Sterling currency rates mentioned within this news item were as follows:

GBP EUR exchange rate was 1.1719, GBP USD exchange rate was 1.5292, GBP AUD exchange rate was 1.4794, GBP NZD exchange rate was 1.8134, and GBP CNY exchange rate was 9.4608.
Dominic Lee About Author: (360 Posts)With over ten years experience as an economist – including four years spent as a chief economist with a major currency broker – Dominic has acquired a wealth of knowledge which he uses to forecast market movements. Dominic now works as an independent business advisor and writes for several financial publications.

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