China's September trade surplus unexpectedly sank to the smallest since April as the pace of export growth cooled. The decline may ease pressure on China to adopt a more flexible currency system.
The surplus was US$7.57 billion, down from US$10.6 billion in August, the Beijing-based customs bureau said on its Web site today. Exports rose 25.9 percent from a year earlier last month, down from 33.2 percent growth in August. The rate of increase in imports was 23.5 percent, the same the previous month.
The drop in the trade surplus may quell calls from China's trading partners for the yuan to appreciate more than it has under the trading mechanism adopted in July. US Treasury Secretary John Snow, who started an eight-day visit to China today, said he wants the country to adopt a more flexible currency trading system.
China's government bonds rose. The yield on the 10-year bond fell 6 basis points, or 0.06 percentage point, to 3.08 percent, a seven-month low. The price of the 4.44 percent bond maturing in February 2015 climbed 0.49, or 4.9 yuan per 1,000 yuan face amount, to 110.99. Bond yields move inversely to price.
China's trade surplus for the first nine months of the year was US$68.33 billion, compared with US$3.99 billion in the same period last year. Exports in the first nine months rose 31.3 percent to US$546.42 billion. Imports grew 16 percent to US$478.09 billion.
China on July 21 allowed its currency to appreciate for the first time in a decade, revaluing the yuan by 2.1 percent against the US dollar and replacing the pegged exchange rate with a link to a basket of currencies. Since the revaluation, the yuan has gained less than 0.3 percent against the dollar.
Snow and policy makers including European Central Bank President Jean-Claude Trichet will meet with Chinese Finance Minister Jin Renqing (
China's swelling trade surplus has been leading to rising trade tensions as countries around the world impose quotas and tariffs on Chinese-made goods now flooding their markets. The EU has already imposed quotas on exports of some Chinese textiles and said it would impose five-year tariffs on polyester fabrics from China. Brazil's Trade Ministry said on Sept. 30 it will investigate possible safeguard measures against rising imports of shoes, textiles and toys from China after talks between the two countries to limit shipments failed.
Central bank Governor Zhou Xiaochuan (
Surging exports from the world's biggest maker of mobile phones, clothes and steel have been helping to create jobs and sustain growth as government curbs on lending cool growth in investment, which last year accounted for nearly half of China's GDP. The economy expanded by more than 9 percent for the past eight quarters.
The US dollar was trading at NT$29.7 at 10am today on the Taipei Foreign Exchange, as the New Taiwan dollar gained NT$1.364 from the previous close last week. The NT dollar continued to rise today, after surging 3.07 percent on Friday. After opening at NT$30.91, the NT dollar gained more than NT$1 in just 15 minutes, briefly passing the NT$30 mark. Before the US Department of the Treasury's semi-annual currency report came out, expectations that the NT dollar would keep rising were already building. The NT dollar on Friday closed at NT$31.064, up by NT$0.953 — a 3.07 percent single-day gain. Today,
‘SHORT TERM’: The local currency would likely remain strong in the near term, driven by anticipated US trade pressure, capital inflows and expectations of a US Fed rate cut The US dollar is expected to fall below NT$30 in the near term, as traders anticipate increased pressure from Washington for Taiwan to allow the New Taiwan dollar to appreciate, Cathay United Bank (國泰世華銀行) chief economist Lin Chi-chao (林啟超) said. Following a sharp drop in the greenback against the NT dollar on Friday, Lin told the Central News Agency that the local currency is likely to remain strong in the short term, driven in part by market psychology surrounding anticipated US policy pressure. On Friday, the US dollar fell NT$0.953, or 3.07 percent, closing at NT$31.064 — its lowest level since Jan.
Hong Kong authorities ramped up sales of the local dollar as the greenback’s slide threatened the foreign-exchange peg. The Hong Kong Monetary Authority (HKMA) sold a record HK$60.5 billion (US$7.8 billion) of the city’s currency, according to an alert sent on its Bloomberg page yesterday in Asia, after it tested the upper end of its trading band. That added to the HK$56.1 billion of sales versus the greenback since Friday. The rapid intervention signals efforts from the city’s authorities to limit the local currency’s moves within its HK$7.75 to HK$7.85 per US dollar trading band. Heavy sales of the local dollar by
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