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☆ China makes surprise rate cut as economic recovery loses steam
▼ + stars: | 2023-06-13 | by ( Laura He | ) edition.cnn.com time to read: +3 min

The rate will drop to 1.9% from 2%, according to the People’s Bank of China. The rate cut reveals “growing concerns among policymakers” about the health of China’s recovery, Capital Economics analysts said on Tuesday. “The … rate cut came earlier and sharper than our and market expectations, highlighting the sense of urgency to alleviate economic momentum and business confidence,” said Becky Liu, head of China macro strategy for Standard Chartered Bank. That rate cut also came as a surprise and followed a week of turmoil in global financial markets triggered by the failure of some regional US banks. In the language of China’s policymakers, that implies a bias towards easing monetary policy, said Larry Hu, chief China economist for Macquarie Group.

Persons: ”, Becky Liu, Zhaopeng Xing, Betty Wang, Yi Gang, Larry Hu, “ Governor Yi Organizations: Hong Kong CNN, People’s Bank of China, Capital, Standard Chartered Bank, PMI, ANZ Research, Macquarie Group, “ Locations: Hong Kong, China

As doubts grow about the strength of its economic recovery, foreign money has left China's markets and the currency has fallen 4% against the dollar since late January. Analysts at Nomura and Societe Generale say the yuan could soon head for 7.3, which as last plumbed in November. Reflecting that, the trade-weighted CFETS basket against which the People's Bank of China (PBOC) manages the currency, has dropped to 99 from 100 in February. THE CHEAP CURRENCYBecky Liu, head of China macro strategy at Standard Chartered Bank, expects the yuan will continue to depreciate. "The interest rate gap remains wide, so many hedge funds continue to use yuan as a funding currency," Liu said.

☆ Volatility in yuan spurs bets China will widen its band
▼ + stars: | 2022-11-30 | by ( ) www.reuters.com time to read: +4 min

SHANGHAI, Nov 30 (Reuters) - As macroeconomic risks induce unprecedented levels of volatility in China's yuan, investors are betting that authorities may widen the currency's tight trading band for first time since 2014 to allow market forces greater say. Day-to-day yuan volatility has been as high as 16% on some days in October, compared with a tame 1% to 4% range in the months and years before. Policy sources have told Reuters they have considered widening the trading band over the past few years to show their commitment to long-term market reforms. Rising volatility in yuan-rouble trading earlier this year prompted the central bank to double the trading band for the pair to 10% in March. Yet, most analysts who think a band widening is due also do not think it is imminent.

☆ Taiwan electric scooter firm Gogoro delaying China expansion
▼ + stars: | 2022-11-11 | by ( ) www.reuters.com time to read: +2 min

TAIPEI, Nov 11 (Reuters) - Taiwanese electric scooter maker Gogoro Inc (GGR.O) is delaying its expansion plans in China due to geopolitical and economic uncertainty there and putting more focus on India and Indonesia, its chief financial officer told Reuters on Friday. As well as making its own vehicles, Gogoro has electric battery and other partnerships with vehicle makers including India's Hero MotoCorp (HROM.NS) and China's Dachangjiang Group and Yadea Group Holdings (1585.HK). Gogoro, known for its green-hued battery swap distribution network for riders, has ambitious plans, seeing potential to replace vast fleets of heavily-polluting, gasoline-powered scooters with electric two-wheelers as Asia's metropolises bid to improve air quality. With China being a challenging place, Gogoro is looking at its plans elsewhere, Aitken said. In Taiwan, Gogoro has a partnership with Foxconn (2317.TW), best known for assembling Apple Inc (AAPL.O) iPhones but with its own huge electric vehicle ambitions.

☆ Macro bets help hedge funds ride rough Chinese markets
▼ + stars: | 2022-10-10 | by ( Summer Zhen | ) www.reuters.com time to read: +4 min

HONG KONG, Oct 11 (Reuters) - The hedge funds that have managed to weather and outperform China's bumpy stock markets so far this year say betting on big-picture macroeconomic changes have helped them. One such fund is Stanley Tao's $230 million Golden Nest Greater China Fund. The hedge fund posted approximately a 2.4% net return for September, according to internal estimates, and is down 1.2% for the first nine months. That compares with MSCI China's (.dMICN00000PUS) roughly 30% decline in the nine months to September, marking the worst first nine months since 2008. Macro strategies are the biggest winners this year, with hedge funds cashing in on the volatility spawned by the differing pace of global rate rises and regulatory changes -- seizing opportunities that didn't exist during a decade of uniform easy monetary policies everywhere.

☆ Explainer: What's inside China's toolbox to rein in excess yuan weakness?
▼ + stars: | 2022-09-21 | by ( ) www.reuters.com time to read: +4 min

The local currency also looks set for the biggest annual loss since 1994, when China unified official and market exchange rates. The rapid yuan declines prompted the People's Bank of China (PBOC) to lower the amount of foreign exchange financial institutions must hold as reserves to rein in weakness. The PBOC has been setting firmer-than-expected daily yuan midpoint fixings since late August to prevent excess yuan weakness, as the onshore spot yuan can only trade in a 2% narrow range around the midpoint. The central bank adjusted the methodology a few times before suspending it in October 2020. "The yuan exchange rate level itself is not the most important, the nature of the issue is whether China's cross-border capital flows remain stable," said Zhong Zhengsheng, chief economist at Ping An Securities.

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