China’s yuan strengthened, touching a 17-year high, on speculation the central bank will allow the currency to appreciate as part of measures to contain the fastest inflation in more than two years.
The People’s Bank of China increased the amount of cash lenders are required to set aside as reserves by half a percentage point effective on Thursday, it said on its Web site yesterday, pushing the requirement to a record 20.5 percent for the biggest banks.
China will continue tightening monetary policy for “some time,” central bank Governor Zhou Xiao-chuan (周小川) said on Sunday, a day after the nation reported -inflation that was the quickest since July 2008.
“The country will focus more on non-interest-rate measures, including more reserve-ratio hikes to drain cash domestically and faster currency appreciation to contain imported inflation,” said Dariusz Kowalczyk, a Hong Kong-based economist at Credit Agricole CIB.
He expects at least one more reserve-ratio increase this year to 21 percent.
The yuan climbed 0.06 percent to 6.5287 per US dollar as of the 4:30pm close in Shanghai yesterday, according to the China Foreign Exchange Trade System. The currency touched 6.5276 earlier, the strongest level since the -country unified official and market exchange rates at the end of 1993. In Hong Kong’s offshore market, the yuan gained 0.02 percent to 6.5215.
The People’s Bank of China set the currency’s reference rate 0.01 percent weaker at 6.5310. The fixing was 6.5301 on Friday, the strongest level since July 2005.
Twelve-month non-deliverable forwards declined 0.02 percent to 6.3830 per US dollar, reflecting bets the yuan will strengthen 2.3 percent in a year from the onshore spot rate, according to data compiled by Bloomberg. The contracts reached 6.3615 on April 8, the highest level since the same month in 2008.
China’s economy expanded 9.7 percent from a year earlier in the first quarter and consumer prices rose 5.4 percent last month, the National Bureau of Statistics of China said on Friday. Economists expected growth of 9.4 percent and a 5.2 percent inflation rate, based on median estimates in Bloomberg surveys.
Asia’s largest economy has room to raise interest rates and banks’ reserve-requirement ratios this year as the country faces difficulties achieving the 4 percent goal for consumer price increases this year, the China Securities Journal said in a front-page editorial yesterday. The yuan may continue to gain appropriately, the editorial said.
The nation’s third interest-rate increase this year may come as soon as next month and policy makers may consider allowing faster appreciation of the yuan to reduce the cost of imported commodities such as oil, according to Societe Generale SA. A flexible yuan will become a very effective tool for curbing inflation, the China Business News reported yesterday, citing former US Treasury secretary Henry Paulson.
Real estate agent and property developer JSL Construction & Development Co (愛山林) led the average compensation rankings among companies listed on the Taiwan Stock Exchange (TWSE) last year, while contract chipmaker Taiwan Semiconductor Manufacturing Co (TSMC, 台積電) finished 14th. JSL Construction paid its employees total average compensation of NT$4.78 million (US$159,701), down 13.5 percent from a year earlier, but still ahead of the most profitable listed tech giants, including TSMC, TWSE data showed. Last year, the average compensation (which includes salary, overtime, bonuses and allowances) paid by TSMC rose 21.6 percent to reach about NT$3.33 million, lifting its ranking by 10 notches
SEASONAL WEAKNESS: The combined revenue of the top 10 foundries fell 5.4%, but rush orders and China’s subsidies partially offset slowing demand Taiwan Semiconductor Manufacturing Co (TSMC, 台積電) further solidified its dominance in the global wafer foundry business in the first quarter of this year, remaining far ahead of its closest rival, Samsung Electronics Co, TrendForce Corp (集邦科技) said yesterday. TSMC posted US$25.52 billion in sales in the January-to-March period, down 5 percent from the previous quarter, but its market share rose from 67.1 percent the previous quarter to 67.6 percent, TrendForce said in a report. While smartphone-related wafer shipments declined in the first quarter due to seasonal factors, solid demand for artificial intelligence (AI) and high-performance computing (HPC) devices and urgent TV-related orders
Prices of gasoline and diesel products at domestic fuel stations are this week to rise NT$0.2 and NT$0.3 per liter respectively, after international crude oil prices increased last week, CPC Corp, Taiwan (台灣中油) and Formosa Petrochemical Corp (台塑石化) said yesterday. International crude oil prices last week snapped a two-week losing streak as the geopolitical situation between Russia and Ukraine turned increasingly tense, CPC said in a statement. News that some oil production facilities in Alberta, Canada, were shut down due to wildfires and that US-Iran nuclear talks made no progress also helped push oil prices to a significant weekly gain, Formosa said
MINERAL DIPLOMACY: The Chinese commerce ministry said it approved applications for the export of rare earths in a move that could help ease US-China trade tensions Chinese Vice Premier He Lifeng (何立峰) is today to meet a US delegation for talks in the UK, Beijing announced on Saturday amid a fragile truce in the trade dispute between the two powers. He is to visit the UK from yesterday to Friday at the invitation of the British government, the Chinese Ministry of Foreign Affairs said in a statement. He and US representatives are to cochair the first meeting of the US-China economic and trade consultation mechanism, it said. US President Donald Trump on Friday announced that a new round of trade talks with China would start in London beginning today,
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