360° Coverage : China's Currency Not Dying, Deutsche Bank Says

2 Updates

China's Currency Not Dying, Deutsche Bank Says

May 17 2014, 12:34pm CDT | by

The Chinese yuan is second only to the Russian ruble as the worst performing BRIC currency compared to the dollar.  It’s down nearly 3% to the greenback this  year, while the Brazilian real is up 6....

Filed under: news

 
 
 

15 weeks ago

China's Currency Not Dying, Deutsche Bank Says

May 17 2014, 12:34pm CDT | by

The Chinese yuan is second only to the Russian ruble as the worst performing BRIC currency compared to the dollar.  It’s down nearly 3% to the greenback this  year, while the Brazilian real is up 6.3% and the Indian rupee is up 5.4%.  Even the Mexican peso is doing better, up 1.12% against the dollar.  Yet, some pundits will have investors believing that the weaker yuan signals the ongoing decline of the Chinese economy.  For them, the yuan’s days of strengthening are over as Beijing opts for a weaker currency to keep cheap exports flowing Westward.

Not so fast, says Deutsche Bank in China.  This currency is not dead yet. In fact, its just beginning to flex its muscles.

Deutsche Bank recently opened its seventh location in China, this one in the new Shanghai Free Trade Zone. Their executives say that demand for the Chinese currency, the yuan, among their corporate clients is growing. In Shanghai, the bank focuses on yuan-denominated cross-border transactions and services ranging from yuan cash pooling and trade financing to cross-border lending and interest rate hedging.

“Surely but slowly global use of the yuan will rise as China gradually makes the currency fully convertible in both trade and investment,” Lee Beng-Hong, head of markets at Deutsche Bank China, told China Daily in an interview published Saturday. “That spells huge opportunities for global banks like us.”

Lee said the yuan’s recent weakening against the dollar hasn’t changed investor sentiment for the longer term trend in the Chinese currency. “Corporations have real demands to use the yuan as one of their payment currencies,” Lee told the Daily. “The demand, supported by China’s steady economic growth, far outweighs the exit of some speculators.”

The yuan is up around 20% against the dollar since 2005. It weakened significantly in 2008 during the financial crisis and again this year amid a slowdown in the Chinese economy. The yuan is not a free-floating currency, but many fixed income fund managers believe the trend is for the yuan to strengthen as the Chinese economy grows.

Edmumd Harriss, a fund manager at the Guinness Atkinson Renmimbi Yuan & Bond Fund, has told FORBES in previous interviews that the yuan is a relatively stable way for investors to diversify away from the dollar.

“You can invest in bank CDs, and corporate bonds. The market is still a bit thin, but we expect that to change over time,” he said. “The long term trend is for the yuan to get stronger, not weaker, as more companies throughout Asia use it in financial transactions. We are seeing that now. It’s no longer a matter of if anymore. The yuan is being used as a trade currency now, slowly but surely,” he said.

Much of the yuan is dependent on China growth. And China is not growing as much as it used to.

The deceleration of China’s economy may even continue during the current quarter, Barclays Capital economist Jian Chang said last week in a note to clients, but an uptick in some leading indicators point to improvement in the months ahead.

Over the last three months, China has been massively lagging the MSCI Emerging Markets Index. The iShares FTSE China (FXI) exchange traded fund is up only 0.5% while the MSCI EM is up 8.26% in the last three months. Year to date, FXI is down more than 6% while the benchmark MSCI EM is up 2.7%.


Flash Player 9 or higher is required to view the chart
Click here to download Flash Player now
 
Update
2

3 days ago

Khazanah throws MAS RM6b lifeline

Aug 29 2014 5:01pm CDT | Source: Business Times Singapore

August 30, 2014 1:15 AMKHAZANAH Nasional will inject RM6 billion (SS$2.4 billion) over three years to resuscitate loss-making Malaysia Airlines (MAS) under a recovery plan that includes even an Act of Parliament. Other key moves are migrating its operations, assets and liabilities to a new company (NewCo) and slashing the wo ...
Source: Business Times Singapore   Full article at: Business Times Singapore
 

 
Update
1

4 days ago

MAS posts loss of RM307m for Q2

Aug 28 2014 5:00pm CDT | Source: Business Times Singapore

August 29, 2014 1:13 AMMALAYSIA Airlines (MAS) registered a loss of RM307 million (S$122 million) for the second quarter to end-June, but warned of worse to come in the second half when the "full financial impact of the double tragedies of MH370 and MH17" ...
Source: Business Times Singapore   Full article at: Business Times Singapore
 

 

Don't miss ...

 

<a href="/latest_stories/all/all/30" rel="author">Forbes</a>
Forbes is among the most trusted resources for the world's business and investment leaders, providing them the uncompromising commentary, concise analysis, relevant tools and real-time reporting they need to succeed at work, profit from investing and have fun with the rewards of winning.

 

blog comments powered by Disqus

Latest stories

Nigeria to get Japanese drug for Ebola treatment
Abuja, Sep 2 (IANS) Nigeria will soon get a Japanese drug to treat Ebola, the country's Health Minister Onyebuchi Chukwu said Monday.
 
 
Japan to aid connectivity upgrade in northeast India
Tokyo, Sep 1 (IANS) India and Japan Monday decided to strengthen cooperation for improving connectivity and socio-economic development in northeastern states of India.
 
 
Three Ebola cases recorded in Nigeria oil hub
Abuja, Sep 1 (IANS) At least three cases of Ebola virus disease (EVD) have been recorded in Nigeria's oil hub of Port Harcourt, where a fatality was confirmed last week, the country's Minister of Health Onyebuchi Chukwu said here Monday.
 
 
India, Japan to elevate strategic partnership
Tokyo, Sep 1 (IANS) Prime Minister Narendra Modi Monday said relations with Japan were of the "highest priority" for his government and announced a slew of initiatives, including turning the strategic partnership into a "special" partnership and a fast-track channel for Japanese investors.
 
 
 

Latest from the Network

Modi focuses on women's empowerment, education
Tokyo, Sep 2 (IANS) Prime Minister Narendra Modi Tuesday stressed on the need for women's empowerment in the present-day world as he began the fourth day of his visit to Japan. Modi, who was addressing students of the...
Read more on Politics Balla
 
George Clooney's back pain continues
Los Angeles, Sep 2 (IANS) Almost 10 years after filming the Oscar-nominated movie "Syriana", actor George Clooney is still feeling the effects of his on-set back injury. The actor traveled to Duke University earlier...
Read more on Celebrity Balla
 
Carrie Underwood is pregnant
Carrie Underwood is pregnant. The former 'American Idol' winner, 31, and husband Mike Fisher announced on Twitter tonight (09.01.14) that they're expecting their first child together. The blonde beauty posted a...
Read more on Celebrity Balla
 
50 Cent buys son miniature car
50 Cent bought his son a miniature car for his birthday. The 39-year-old rapper - whose real name is Curtis James Jackson - surprised Sire with a little Mercedes ML450 SUV, a smaller representation of his own vehicle,...
Read more on Celebrity Balla
 
Kirsten Dunst criticises Apple for leaked photos
Kirsten Dunst has hit out at Apple after naked photographs of her were allegedly leaked online. The 32-year-old actress took to her Twitter account last night (09.01.14) to criticize the American multinational...
Read more on Celebrity Balla
 
Daisy Lowe feels 'rubbish' without exercise
Daisy Lowe feels ''rubbish'' if she doesn't exercise at least three times a week. The 25-year-old model admits she maintains her enviable figure by working out on a regular basis, but she still enjoys tucking in to...
Read more on Celebrity Balla
 
Paul Smith collaborates with Led Zeppelin
London, Sep 2 (IANS) British fashion designer Paul Smith has collaborated with legendary rock band Led Zeppelin for his latest scarf collection. The London-based designer has teamed-up with the band to create the...
Read more on Celebrity Balla
 
US continues air strikes against IS in Iraq
Washington, Sep 2 (IANS) US forces continued their attack on Islamic State (IS) militants in northern Iraq with three more air strikes conducted Monday, the army said. The strikes destroyed three IS trucks and...
Read more on Politics Balla
 
13 killed in Baghdad bomb blasts
Baghdad, Sep 2 (IANS) As many as 13 people have been killed in two explosions in Iraq's capital Baghdad Monday, a police source said. Thirteen people were killed and 45 others injured when two car bombs exploded in...
Read more on Politics Balla